Armenia's Economic Pulse

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Re: Armenia's Economic Pulse

A Large Business In A Small Village:

It’s always difficult to establish a new small or medium-sized enterprise or develop business production in rural areas, especially in the villages next to the border. The lack of communications, logistics, roads and resources often turns entrepreneurs away. However, a businessman from Tavush region managed to open a huge glove factory in Choratan, a village near the Armenia and Azerbaijan border. Now, there are 150 employees working there. Every day, they produce thousands of pairs of gloves to export to Russia.

Pretty cool news there. I hope more news like this can be had.

[Zeytun]

Re: Armenia's Economic Pulse

Modern technology center opens in Armenia's Vanadzor

http://www.panarmenian.net/eng/news/224353/Technology_center_opens_in_Armenias_Vanadzor

Construction of new medical center in Vanadzor is at completion stage

https://armenpress.am/eng/news/865826/construction-of-new-medical-center-in-vanadzor-is-at-completion-stage.html

Football Academy opens in Vanadzor

http://armenpress.am/eng/news/865830/football-academy-opens-in-vanadzor-lori-province.html

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Re: Armenia's Economic Pulse

Armenia, Iran Sign Deal To Increase Gas Imports, Power Flows


November 03, 2016
RFE/RL's Armenian Service

http://www.rferl.org/a/armenian-iran-sign-deal-increase-gas-imports-power-flows/28092312.html

Armenia’s Ministry of Energy, Infrastructure, and Natural Resources reported on November 2 that representatives of Armenia’s Energaimpex company and the National Iranian Gas Export Company signed a document authorizing the purchase of more Iranian natural gas during a visit to Iran on October 31 and November 1.

Armenia currently imports up to 500 million cubic meters of Iranian gas annually through a pipeline built in 2008. By comparison, Russian gas supplies to the South Caucasus country total around 2 billion cubic meters.

Iranian gas has until now been purchased by a state-owned Armenian thermal-power plant. The plant pays for it with electricity delivered to Iran.

Recently, Yerevan reportedly offered to buy additional volumes of Iranian gas, some of which could be re-exported to Georgia, and the Iranian side is said to have accepted the proposal.

The Armenian Energy Ministry said that its delegation, led by Deputy Minister Hayk Harutiunian, discussed prospects of transiting Iranian gas to third countries via Armenia with Iran’s deputy oil minister and a senior National Gas Export Company representative.

The delegation also met with Iran’s Deputy Energy Minister Houshang Falahatian and an adviser to the minister, Homayoun Hayeri, and discussed increasing the volumes of electricity flows between the countries.

The parties discussed increasing power flows between Armenia, Iran, and Georgia within the current capacity of high-voltage lines, and also in the Iran-Armenia-Georgia-Russia regional cooperation format after the expected launch of new infrastructure, the ministry said.

The Armenian delegation members also visited the Iranian Mapna Company, which intends to invest in the construction of wind power stations in Armenia, as well as the Sanir Company, which is the general contractor for the construction of a third Iran-Armenia high-voltage line.

Artashes Tumanian, the Armenian ambassador to Iran, told RFE/RL’s Armenian Service last month that Russia will not object to the increased energy cooperation with Iran because the deal “does not run counter to anybody’s interests.”

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Re: Armenia's Economic Pulse

Corruption is the biggest obstacle to foreign investments in Armenia


YEREVAN, November 21. /ARKA/. Corruption and unhealthy atmosphere in the domestic business are xthe biggest obstacle to foreign investments xin Armenia, xthe head of the National Union of Employers xGagik Makaryan said today citing data of the Transparency International organization which rates Armenia as a regional leader in terms of corruption.

According to the latest xstudy of Transparency International - Global Corruption Barometer, Armenia is one of the most corrupt countries in Europe and Central Asia.x

The respondents of the survey singled out the xhigh level of corruption in government institutions and the insufficient efforts of the authorities to combat xit.x

Makaryan believes that a special investment fund should be established and a working group that will support investors from abroad.x

"The working group will make recommendations to investors, helping them to adapt to the local xenvironment and enforce their rights. Even the example of Syrian Armenians who have decided to invest in Armenia, shows that we" speak different languages "and perceive many things xdifferently,"- Makaryan said.x

According to Makaryan, Armenia’s most important economic sector is agriculture, as there is always a great demand for fresh fruits, vegetables, and dried fruits.

"Modern fruit gardens, new greenhouses - all this will create great opportunities for exporting quality agricultural products", - he said.

Makaryan said the second important branch is energy. In his words, traditional energy sources in Armenia have been exhausted, but instead there are good prospects for the development of alternative energy. And the third, the most attractive sector for foreign investors is engineering and IT technology.x

"Armenia demonstrates quite a good performance in this area. Our advances in technology can really attract investors, " he said. -0-

http://arka.am/en/news/business/corruption_is_the_biggest_obstacle_to_foreign_investments_in_armenia/

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Re: Armenia's Economic Pulse

YEREVAN (Armenpress)—Prime Minister of Armenia Karen Karapetyan on November 18 received the Iranian delegation led by Deputy Minister of Economy and Finance, Head of Iran’s Customs Administration Masoud Karbasian, press service of the Government said.
“The Islamic Republic of Iran is not only a friendly country with Armenia, but also it is one of the key partners, and our political dialogue is at the highest level. However, we have a potential to further expand and develop our economic relations. The harmonious works of the customs offices of the two states will also contribute to the development of trade-economic ties,” Karapetyan said.
He informed that on Friday at the Government’s session he instructed the respective Ministries to form a working group and work with the Iranian side towards boosting the export of Armenian products, in particular, the food and agricultural products, from Armenia to Iran, as well as to discuss with the businessmen the prospects of establishing a free economic zone in the territory bordering Iran. Karapetyan said this is a mutually beneficial chance for the businessmen of the two states, and works must be carried out on that path.
The Iranian official congratulated Karapetyan on his appointment and wished him success.
Presenting the results of working talks with the Chairman of the State Revenue Committee under the Armenian Government Vardan Harutyunyan, Masoud Karbasian said a number of agreements were reached at the meeting. In particular, a Memorandum of understanding was signed on cooperation in customs administration, the both sides attached importance to the online exchange of information, as well as informing the Armenian and Iranian societies about the customs procedures.
“We can establish cooperation towards the Eurasian Economic Union market through the free economic zone. Armenia, as a linking bridge, can play a decisive role in this sector, which in its turn will contribute to implementing joint investment projects,” Karbasian said.
In response, Karapetyan said Armenia is ready to form a respective platform towards the EAEU market.
The sides also discussed a number of issues of bilateral interest, related to the cooperation development in transportation and transit infrastructures sectors.

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Armenian premier tells Bloomberg how he intends to develop economy and combat corruption


YEREVAN, November 22. /ARKA/. The impoverished ex-Soviet republic needs “profound change,’’ Karen Karapetyan, who took office in September, said in an interview with Bloomberg in Yerevan, on Saturday.x

“We’re proposing the most rapid change that’s possible, including measures to combat corruption by streamlining bureaucracy and a government fund to support enterprise,” he said.

“Businesses shouldn’t be obstructed’’ by corrupt officials seeking payments for administrative decisions or by dominant rivals using political ties to restrict competition, said Karapetyan, a former mayor of Yerevan who took office after returning from Russia, where he worked in Moscow since 2012 for a subsidiary of Gazprom PJSC, the world’s largest natural-gas exporter. “We will create an even, competitive, level playing field.’’

Karapetyan told Bloomberg that Armenia’s foreign debt is $5.8 billion with GDP at $10 billion, while growth of 3.2 percent in 2017 won’t be enough to raise living standards significantly. “We also have external debt growing faster than the GDP growth and growing faster than revenues,’’ he said.

Karapetyan also said changes in the leadership of the customs service and in the tax code are improving transparency, and he won’t allow dominant players to use “administrative support that isn’t available to others’’ to suppress competition. “No one is immune and no one is privileged,’’ he said.

While he’s focused on immediate improvements, Karapetyan said he’ll also form an advisory group including foreign specialists to “brainstorm how we can develop the country’’ for the long term, including with tax changes and support for businesses in areas such as health care, education and agriculture.

Armenia rejected a trade pact with the European Union to enter the Russian-led Eurasian Economic Union of former Soviet states in January last year.x

While critics say there’s been no economic benefit so far, nobody knows what would have happened if Armenia hadn’t joined and “the negative impact could have been much greater,’’ while membership doesn’t stop Armenia developing EU trade, Karapetyan said.

Armenia’s also seeking to bolster trade with Iran following the lifting of international sanctions over the Islamic Republic’s nuclear program. Karapetyan said he’s ordered plans developed by December 25 to implement a free economic zone near Armenia’s southern border to boost ties in areas including agriculture and food production.

“We clearly understand that reduced public spending may have a downside effect,’’ while businesses are delaying investment until after the elections, Karapetyan said in his interview.x

Amid speculation he’s a short-term appointment to improve the ruling Republican Party’s prospects, it’s “inappropriate’’ to say if he’ll be prime minister after the vote because nobody can predict the outcome, he said.

Even so, he’s seeking to develop clear long-term plans over the next six months so that “from 2018 we’ll have sustainable year-on-year growth’’. --0---

http://arka.am/en/news/politics/armenian_premier_tells_bloomberg_how_he_intends_to_develop_economy_and_combat_corruption/

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Re: Armenia's Economic Pulse

21.11.2016xAuthor:xF. William Engdahl
The Iran-Russia-China Strategic Triangle
Column:xPolitics
Region:xEastern Asia


The developing economic, political and military links binding Iran, China and Russia in what I see as an emerging Golden Triangle in Eurasia, are continuing to deepen insignificant areas. This, while it seems to be US geopolitical strategy in a prospective Trump Administration to distance Washington from both Iran and from China, while dangling the carrot of lessened confrontation between Washington and Moscow–classic Halford Mackinder or Kissinger geopolitics of avoiding a two-front war that was colossally backfiring on Washington by trying to shift the power balance. At present, the dynamic of the past several years of closer cooperation by the three pivotal states of the Eurasian Heartland is gaining strategic momentum. The latest is the visit of China’s Minister of Defense and of Russian senior officials to Teheran.
On November 14-15 in Teheran, during a high-level visit of the Chinese Defense Minister, General Chang Wanquan, with Iranian President Hassan Rouhani and Iranian Defense Minister Hossein Dehghan, the two major Eurasian nations signed a deal to enhance military cooperation. The agreement calls for intensification of bilateral military training and closer cooperation on what the Iran sees as regional security issues, with terrorism and Syria at the top of the list. Chief of Staff of the Iranian Armed Forces, Major General Mohammad Hossein Baqeri, said Iran is ready to share with China its experiences in fighting against the terrorist groups in Iraq and Syria. Dehghan added that the agreement represents an “upgrade in long-term military and defense cooperation withxChina.”
In recent weeks China has directly become engaged, joining Russia and Iran, at the behest of the government of Syrian President Bashar al Assad, in the war against ISIS and other terrorist groups including Al Qaeda-Al Nusra Front and its numerous spinoffs. The formal agreement with Teheran, which has considerable on the ground experience with the fight in Syria, clearly represents a deepening of bilateral China-Iran relations.
At the same time as China and Iran were meeting in Teheran, Viktor Ozerov, head of the Defense and Security Committee of the Russian Federation Council, the upper house of the Parliament, was also in Teheran. There, he told RAI Novosti that Russia and Iran are in talks over an arms deal worth around $10 billion. It calls for Russia to deliver T-90 tanks, artillery systems, planes and helicopters to Iran.
In brief, we have a deepening of military defense links between the three points of the emerging Eurasian Triangle. This will have huge consequences, not merely for stabilization of Syria and Iraq in the Middle East. It will also give a major boost to the emerging economic links between the three great powers of the Eurasian Heartland.
Halford J. Mackinder, the father of British geopolitics variously called Russia the Heartland Power, and towards the end of his life, in a 1943 guest article in Foreign Affairs, journal of the New York Council on Foreign Relations, suggested China might equally play the geographic and political role of Russia as the Eurasian Heartland Power.
Today, given the enormous growth since 1943 of the geopolitical importance of the Persian Gulf oil and gas-producing nations for the world economy, the bonding together of Iran to China and to Russia forms a new Heartland Power, to stay with the designation of Mackinder.
The added element since 2013 is the initiative of China President Xi Jinping to criss-cross all Eurasia and even South Asia with what he calls China’s One Belt, One Road infrastructure. Both China and Russia have formally agreed to coordinate with China in this multi-trillion dollar vast infrastructure project to link entire new emerging markets of Central Asia, Iran–and potentially Turkey– to a coherent high-speed rail and maritime port network that within the end of this decade will already begin to transform the economic worth of the entire Eurasia.
China-Iran Trade
Already despite onerous US and EU economic sanctions on Iran, Sino-Iranian trade had grown even before the 2015 nuclear agreement loosened some sanctions. Bilateral trade grew from $400 million in 1989 to almost $52 billion in 2014. Today the Iran-China Chamber of Commerce and Industries (I.C.C.C.I.), has grown from 65 members in 2001 to 6,000, an indication of the intensity of economic cooperation.
On the lifting of sanctions this January, 2016 China President Xi Jinping went to Teheran where the two countries signed major economic agreements. After their January 23 talks, Iranian president Rouhani announced that, “Iran and China have agreed to increase trade to $600 billion in the next 10 years,” adding that both countries, “have agreed on forming strategic relations, reflected in a 25-year comprehensive document.” Moreover, Iran agreed to nuclear energy cooperation and formally participating in China’s One Belt, One Road which Russia and the Eurasian Economic Union countries had formally agreed to join inx2015.
Iran – Key Link
China’s One Belt, One Bridge, sometimes referred to as her New Economic Silk Road, is a brilliant geopolitical, economic, military and cultural project. It will enable the member nations to be far more shielded from USA Naval power to interdict vital goods trade by sea from Europe or the Middle East that must pass through the US-patrolled Strait of Malacca. As well, while Washington and Brussels impose economic sanctions on Russian trade with Europe, the Ukrainian crisis forced a far more serious Russian “pivot to the East,” notably to China.
What has emerged since the crisis created for Russia with the USA February 2014 Ukraine coup d’etat, is a strategic cooperation between the three major powers–Iran, China and Russia, what Zbigniew Brzezinski described in his 1997 book, The Grand Chessboard, as the largest geopolitical challenge facing continued Sole Superpower supremacy of the United States following Washington’s destruction of the Soviet Union in 1989-91.
Brzezinski declared then, accurately, “…how America ‘manages’ Eurasia is critical. A power that dominates Eurasia would control two of the world’s three most advanced and economically productive regions. A mere glance at the map also suggests that control over Eurasia would almost automatically entail Africa’s subordination, rendering the Western Hemisphere and Oceania (Australia) geopolitically peripheral to the world’s central continent. About 75 per cent of the world’s people live in Eurasia, and most of the world’s physical wealth is there as well, both in its enterprises and underneath its soil. Eurasia accounts for about three-fourths of the world’s known energy resources.”
For the Eurasian cohesion under the China OBOR infrastructure developments, Iran is strategic. Not only is China a major buyer of Iranian oil, Iran’s largest export customer. But Iran is also vital to China’s vision to create entirely new manufacturing and logistics centers or hubs in Central Asia and Europe. And, as Indian strategic consultant, Debalina Ghoshal points out, China, “has a keen interest in Iran’s geostrategic location, bordering both the Caspian Sea and the Persian Gulf. The location enables China to carry out the One Belt One Roadxagenda.”
Iran is already partly linked to a recently-completed section of China’s OBOR rail-port infrastructure great project. In early 2015 rail freight began to move across the new Zhanaozen—Gyzylgaya—Bereket—Kyzyl Atrek—Gorgan railway, completed in December, 2014 in the impressive time of five years from start.
That rail line links Iran to China via the rail line through Turkmenistan and Kazakhstan, a founding member of the OBOR idea since Xi Jinping first unveiled it in a visit to Kazakhstan in 2013. The new rail link, known as the North-South Transnational Rail Corridor connects Iran to Kazakhstan via Turkmenistan and on to the China border. The new rail line runs 908 kilometers, beginning at Uzen in Kazakhstan (120 km), then through Gyzylgaya-Bereket-Etrek in Turkmenistan (700 km) and ending at Gorgan in Iran (88 km). As a result of the new rail link, freight traffic is shifting from truck to rail as the line connects all key ports and terminals of the entirexCaspian region.
The recently completed Uzen to Gorgan rail line as part of the OBOR is transforming the economic importance of an entire part of Central Asia
The new Iran-Turkmenistan-Kazakhstan to China rail line will transform the entire economic significance of the vast Central Asian region. Bereket in Turkmenistan — which is at the crossroads of the existing Trans-Caspian rail line linking Turkmenbashi on the Caspian Sea with Uzbekistan, Eastern Kazakhstan and China — is now to be site of a large locomotive repair depot together with a modern state-of-the-art freight terminal, making it a major freight hub.
Further, the Turkmen government is building a huge port at Turkmenbashi that would enable further trade links potentially to the Russian Federation by sea. The rail link to Gorgan in Iran already is linked to Iran’s national railway grid and will thereby enable rail transport between China, Central Asia and the Persian Gulf. The connection will shorten the route by 400 km, and reduce freight transport time more or less in half, from 45-60 days at present to 25-30 days. This is a huge economicxgain.
Since April this year as well, Moscow and Teheran have been engaged in discussions of building a ship canal from the Caspian Sea to the Persian Gulf through Iran. Russia, Azerbaijan and Iran also agreed to speed up the talks on a North-South transport corridor that partly would go along the western coast of the Caspian Sea from Russia to Iran through Azerbaijan. The North-South corridor, when completed will reduce the time of cargo transport from India to Central Asia and Russia from at present about 40 days from Mumbai, India to Moscow to 14 days and bypass the congested and expensivexSuez Canal.
Everywhere we go today across Eurasia, from the Persian Gulf and Caspian Sea to Russia, Kazakhstan, Turkmenistan, and on to China, there is a process underway for the first time since the original Silk Road era of more than two thousand years ago, of building up an entire new economic space, the Eurasian Heartland. Were the Turkish government to join the OBOR project wholeheartedly, the potentials for a Eurasian transformation would become enormous. It remains to be seen what a USA with a Trump presidency will do or not do to try to destroy this beautiful Eurasian build up. If he is as wise as his sound bites make him sound, he will recognize that this kind of development is the only true future for his United States other than bankruptcy, economic depression and wars of destruction. If not, more and more much of the rest of the world seems determined to go it without the “Sole Superpower.”
F. William Engdahl is strategic risk consultant and lecturer, hexholdsxa degree in politics from Princeton University andxis a best-selling author on oil and geopolitics, exclusively for the online magazinex“New Eastern Outlook.”

http://journal-neo.org/2016/11/21/the-iran-russia-china-strategic-triangle/

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Re: Armenia's Economic Pulse

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Re: Armenia's Economic Pulse

Georgia: The Key to China's 'Belt and Road'
Georgia has become a major hub for China’s Silk Road plans, despite being left out entirely in the early stages.
By Revaz Topuria
April 28, 2016
xxxxx
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Better later than never? For Georgia, the answer is a resounding yes.
Back in 2013 when Chinese President Xi Jinping announced his ambitious Silk Road Economic Belt and Maritime Silk Road projects (also called One Belt, One Road or OBOR), Georgia was not even mentioned. That wasn’t surprising; Georgia was not a part of main route on the ancient Silk Road, so neither was it included in Xi’s new route. But things have changed rapidly.
Right now Sino-Georgian relations are at their peak. The two countries are negotiating a free trade agreement and both sides admit Georgia has a key role to play in the New Silk Road project as a hub between Asia and Europe. “There is no country in the region that is more open to Chinese business and investment, Chinese people and culture or Chinese innovation and ideas than Georgia,”xthen prime minister Irakli Garibashvili said in a speech at Peking University in September 2015. In an op-edxforxChina Daily, hexadded that “Georgia is Europe’s natural gateway to Asia, as it is Europe’s eastern most point both by land and sea.” Right now, Georgia is attracting China and plans to transform itself into a logistics and transportation hub to connect Asia and Europe.
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But there are still many questions to be asked. How, when, and why did the Georgian government attract Chinese interest? What interest do both parties have in the project? And how realistic is it? China always had some interest in the Caucasus region — there are some major Chinese investors in Georgia — but the Middle Kingdom never considered Georgia as a strategic partner. Even Georgian media was quiet about OBOR at the beginning.
I first heard about Georgia’s potential involvement in this project last September, when Garibashvili visited China, but it was not from Georgian media. By that time I was studying in Lanzhou (one of the key cities of OBOR) and while riding the bus I happened to hear on the radio that the Georgian prime minister was visiting China to discuss an FTA and OBOR.
“We are definitely ready to become the part of the New Silk Road route. Our aim is to use Georgia’s strategic location as best we can,” said Garibashvili while visiting China.
In addition to talking with his counterpart, China’s Li Keqiang, Garibashvili also met with the president of the Asian Infrastructure Investment Bank, Jin Liqun. At the meeting, it was noted that Georgia will be one of the first countries where the bank will start implementing projects. One month later, Georgia hosted the Tbilisi Silk Road Forum, the first forum about the OBOR project organized outside of China. Clearly, Georgia is getting more involved in OBOR, but how did it all start?
China and Georgia established relations in 1992. China was one of the first countries to recognize Georgia’s independence, but Beijing didn’t have many interests in region at that time. Trade between two countries was only $3.7 million at the end of the 20th century. But in recent years, it’s become clear that China sees Georgia’s potential. Driven by Georgia’s privileged access to the European Union, investment-friendly tax policy, and strategic location on the Black Sea, Chinese investment interests in Georgia now run the gamut, and look set to expand. Trade between countries was worth over $700 million in 2015, FDI from China was more than $200 million by 2014, and exports from Georgia to China have increased by around 2000 percent compared to 2009.
Before Garibashvili’s visit to China in September 2015,xChina and Georgia held numerous exchanges. The Georgian delegations tried their best to get China’s attention and China tried to understand whether Georgia could be the gateway between Asia and Europe it needed so much to realize OBOR. After numerous visits by Georgian officials, several memorandums were signed and China began to pay more attention to Georgia.xOn December 13, the first transit train from China arrived to a station in Georgia, thus marking the opening of the “Silk Railroad.”
Why Georgia? Why now? As I noted earlier, Georgia was not even mentioned when the OBOR plan was xfirst announced. China never considered Georgia as a key player in Europe, but things have changed. It’s believed in Georgia that the country has a unique geostrategic location, but it apparently wasn’t so attractive for China before. Geography alone can’t explain why Georgia gained so much importance for OBOR in the past year. Some assume that China was interested because of the Georgia-EU Deep and Comprehensive Free Trade Area (DCFTA) and the country’s investment-friendly tax policy. Georgia does have a welcoming investment policy (it’s 24th in the World Bank’s Doing Businessx2016 rankings) but the DCFTA argument falls apart on closer examination. Before Georgia, Hungary and Belarus were believed to be China’s strategic European partners in OBOR. Hungary is officially a member state of the EU; in comparison, it’s unlikely that Georgia’s Free Trade Agreement with the EU attracted China.
Then why? The answer is simple, and it’s hidden in China’s economic downturn. China’s economy has slowed to its lowest level of growth in 25 years. Quarterly growth it at its lowest rate since the depths of the financial crisis six years ago. Depreciation of China’s currency, less domestic spending and less FDI mean nothing good for the future of country’s economy. China is in need of money to finance the many OBOR projects in different countries, but the overwhelming majority of those investments are long-term projects; China would not gain any material profits for some years at least. So, China has to cut on spending but Xi can’t simply abandon OBOR — it’s an important plan for domestic propaganda while China’s economy is going down, and on the international level it marks China’s global ambitions. Saying no to OBOR at this point would be political suicide.
To connect with Europe, China would have to spend a lot of money on infrastructure in Belarus and Hungary. Taking into consideration the economic situation, they began to look for some less expensive alternatives. Here comes Georgia and the nearly completed Kars-Tbilisi-Baku railway, which is intended to complete a transport corridor linking Azerbaijan to Turkey, which could be used to connect Central Asia and China to Europe by rail. High returns on a light financial burden provide the main reason for China’s interest in Georgia at this point.
What does this mean for Georgia? To be clear, it does notxmean that Georgia is changing its Euro-Atlantic path.xGeorgia is still struggling toward membership in the EU and NATO. Instead, OBOR is seen as a potential solution to some domestic issues: creating more jobs, building infrastructure, getting more FDI, and providing a much-needed economic boost.
Besides the economic gains, there is even bigger reason why Georgia wants to be part of this project: Russia. The neighbor from the north is believed to be Georgia’s number one threat and enemy, and Moscow is strongly opposed to Georgia’s western choice. But if Georgia were to be a main hub between Europe and Asia in the OBOR project, China would be the guarantor of Georgia’s stability. Given the sanctions imposed on Russia and its isolation, Beijing is the only strong partner Russia has for now; in this situation Putin wouldn’t dare to mess with China’s new protege. It’s a “win-win game” as the Chinese like to say: China gets its OBOR plan realized with less expenses, while Georgia gets economic prosperity and a guarantee of stability, which makes it easier for the country to rush toward NATO and EU.
However, there are plenty of obstacles for China while realizing the OBOR plan: skeptical attitudes toward China of people living in OBOR countries; the potential for the partnership with Russia to sour; international terrorism on the OBOR route; and the downturn of the Chinese economy. Despite all of this, OBOR is already being realized; the first steps have been made.
Meanwhile, though Georgia is not ruled by Garibashvili anymore, new Prime Minister Giorgi Kvirikashvilihas also acknowledged the importance of OBOR. “The ‘One Belt, One Road’ initiative is a very important initiative for us. It offers a lot of new opportunities to countries along the Silk Road,” Kvirikashvili said in his interview with China Central Television.
The Georgian government announcedxin February that the Anaklia Development Consortium (“ADC”), a joint venture between Georgian Group TBC Holding and U.S.-based Conti International, has been awarded the contract to build a new deep-water Black Sea port at Anaklia, on the western coast of Georgia. The new port will have the capacity to accommodate the Black Sea’s largest vessels and will provide a new maritime corridor connecting China with Europe. The Georgian government will contribute $100 million towards the $2.5 billion project; ADC will fund the remainder of the cost through a mixture of equity and debt from private and institutional investors. Upon completion, the port will have the capacity to process 100 million tonnes of cargo per year, which could boost Georgia’s GDP by 0.5 percent.
Located on the eastern edge of the Black Sea, Anaklia strategically sits on the shortest route from China to Europe. Though a joint Chinese bid to build the port was unsuccessful, Georgia still envisions a linkage between the Anaklia port and OBOR.xMamuka Khazaradze, founder and president of TBC Holding, said: “The Anaklia project represents a one-of-a-kind investment in the restoration of the Silk Road that will pay dividends for generations of workers in Asia and Europe.” The Anaklia Development Consortium was also awarded the right to develop a free industrial zone on about 600 hectares of land adjacent to the port.
On December 13, the first transit train from China arrived to a station in Georgia, marking the opening of the “Silk Railroad.” The train’s arrival was met with a celebratory ceremony attended by then-Georgian Prime Minister Garibashvili, the director of Georgian Railways, and the acting Chinese ambassador to Georgia. Garibashvilixonce again emphasized that the Silk Road project is an historical commitment that will significantly increase the amount of foreign investment and jobs in Georgia.
The cargo sent from China reached Georgia in 15 days. It is noteworthy that on its way to Georgia, the train went through Kazakhstan and Azerbaijan and would then pass by sea from Georgia to Turkey. In the future, this railway transit route is expected to provide a fast, accessible connection between Europe and Asia. Cargo sent from Lianyungang, China’s easternmost port city, will take a little over two weeks to reach Istanbul, 25 days short than if shipped by the sea route. The Kars-Tbilisi-Baku railway is expected to be finished this year and cargo from China will likely increase significantly. This trans-Caspian route satisfies several checkboxes: it avoids Russia and it can potentially capitalize on the opening of Iran.
Meanwhile, on January 15, a shipment was sent from Ukraine, reaching China on February 2. The shipment launched via ferry from the Ukrainian port in Chornomorsk and crossed the Black Sea to Batumi, Georgia (future cargo will likely head to Anaklia after construction on the new port is finished). From there, it continued on rail through Georgia and into Azerbaijan. At the new Azeri port at Alyat, the cargo was loaded onto a second ferry and sailed for the Kazakh port at Aktau, where it once again took to the rails headed for the Chinese border. Taken together, these two routes help us draw a new map of OBOR, where Georgia plays one of the main roles as a hub in two directions — from China to Turkey and Ukraine to China, and vice-versa. Most importantly, it provides a way to avoid Russia for Turkey and Ukraine, both of whom have tense relations with Moscow at the moment.
Besides railways and ports, the FTA negotiations are also a major boon for Georgia. Georgia will potentially be the first country in the South Caucasus to strike up free-trade relations with the world’s second largest economy, while already having a free-trade deal concluded with the EU. Genadi Arveladze, Georgia’s deputy minister of economy , said that parties have already held several rounds of negotiations on the FTA, with the next round scheduled for May 9. He added that by the end of this year negotiations should be over and Georgia and China would have their FTA.
In early April, Liu Xianzong, chairman of xthe Silk Road International Chamber of Commerce, visited Georgia, where he met with the president, prime minster, and minister of foreign affairs. At every meeting, both parties highlighted Georgia’s future role in OBOR. At the same time, the executive director of the Partnership Fund (an organization created by the Georgian government to attract investment), David Saganelidze, visited China, met with Chinese officials and even made a speech about Georgia’s involvement in OBOR at the Boao Forum for Asia.
How things have changed. Georgia is now a main solution for China to realize its ambitious OBOR project. Let’s see how things develop from here.
Revaz Topuria is president of the Europe-Georgia Institute and Executive Director of the Future Diplomats’ Club of Georgia.

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Re: Armenia's Economic Pulse

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