The Kars-Akhalkalaki railway: good for Georgia?

Thursday, June 22, 2006, #115 (1135)
The Messenger
By M. Alkhazashvili

The Financial Committee of the U.S. Congress has forbidden American companies from investing in the Kars-Akhalkalaki railway. However, even if U.S. companies don't finance the project it will be quite possible to other sources of funding. Turkey is more than ready to bear the cost, but just how beneficial is this project going to be for Georgia?

Economist Gia Khukhashvili argues that it is necessary to conduct market research, as it could well turn out that the railway will redirect cargo which had been passing through Georgian ports, which would ultimately be detrimental to the Georgian economy.

"It may result in catastrophic conditions for Georgian ports. The government has not thought the decision through. Serious analytical works must be conducted; problems should not be created for our ports, only if this is guaranteed will the project be beneficial" said Khukhashvili in the newspaper Rezonansi.

Analyst Emzar Jgerenaia is far more skeptical. According to him operating the Kars-Akhalkalaki-Tbilisi-Baku railway line won't bring any economic benefits for Georgia at all. "The construction of the railway needs a lot of investment, the line runs through an earthquake zone and additional works will be needed," Jgerenaia said in Khvalindeli Dghe.

Some analysts believe that it would be more profitable to focus on the needs of neighbouring Armenia. According to Akhali Taoba, Georgia should consider Armenia's concern over building the Kars-Akhalkalaki railway and its interest in the reopening of the Sokhumi-Tbilisi line. By discussing this issue with Russia, Georgia could find itself in a stronger bargaining position on the conflict in Abkhazia.

"It is not ruled out that the Kars-Akhalkalaki project and the reopening of the railway line in Abkhazia may have profound effects on the reintegration process in Abkhazia," says the newspaper Akhali Taoba.

But these statements are mostly conjectural, as there has been no detailed costing of the proposed railway, and no funds have yet been raised. The opinions are primarily conditioned by political, rather than economic, attitudes to the issue.

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