Poti-Caucasus Ferry Route at Risk

Thursday, June 7, 2007, #106 (1373)
Messenger.ge, Georgia
By M. Alkhazashvili
(Translated by Diana Dundua)

Armenia remains Russia's strategic ally in the South Caucasus. Armenia's economic sector has been for a long time tied to the Russian market although, currently, the Kremlin has no transportation links with Armenia.

Transportation blockade aimed to "punish" Georgia during the "spy row" last October has negatively influenced Armenia in the process.

Last year, Russia unexpectedly blocked the Kazbegi-Lars customs checkpoint - the only customs checkpoint controlled by Georgians on the Georgian-Russian border. Russian authorities argued the checkpoints needed renovations. The route continues to be blocked and it hurts not only Georgia's interests but also those of Armenia.

The checkpoint at the Roki Tunnel is not well- controlled, linking Russia with Tskhinvali separatist authorities.

Russia hoped that the Georgian administration would get accustomed to travelers and cargo passing through separatist-controlled customs checkpoints. However, the Georgian government is not supporting this idea. As a result, Russia has lost its transportation link with Armenia.

The railway connection with Russia is very important for Armenia too. Armenian experts calculated that Armenian economic sector was losing USD 500 million annually because of the closed railway via Abkhazia.

A while back, Armenia actively demanded that Georgia open the railway, although they also asked Russia to allow Georgians to control the customs checkpoints at Psou (Russian-Abkhaz border) and the Roki Tunnel. The Russian authorities did not do this and later imposed a transportation blockade.

But to support Armenia's interests, Russia was obliged to help create the Poti-Caucasus ferry route.

This ferry route doesn't make much sense as the cost to transport cargo appears to be very expensive and if the railway via Abkhazia is reopened, no one will need it.

According to the Chairman of Armenian Union of Industrialists and Entrepreneurs Arsen Kazarian, currently the Poti-Caucasus ferry route is not functioning, as it does not have any cargo to load. He also expressed dissatisfaction about the tariffs for the route.

Armenian authorities worry that the new ferry route will not last long. The Swedish company Reserve Capital Enterprising Corporation that controls the ferry intends to sell 45 percent of the shares in the near future.

According to the Armenian newspaper Aiots Ashkher, the Swedish company wants to attract funding from Armenian companies to reduce its business risk and to decrease possible losses to the company as well.

The newspaper reports that when the Poti-Caucasus ferry route was opened, the company bragged that cargo transportation would not take much time and it would be cheaper compared to the Poti-Ilichevsk ferry route. Now it is clear that the cost is approximately the same and cargo arrives in 2 days instead of 7.

At the same time the owner of the Swedish company wants to be the sole cargo transporter from Yerevan to Poti and this could put Armenians in a difficult position. If the existing problems are not solved, the Poti-Caucasus ferry route will have no future.

Thursday, June 7, 2007, #106 (1373)

Poti-Caucasus Ferry Route at Risk
By M. Alkhazashvili
(Translated by Diana Dundua)

Armenia remains Russia's strategic ally in the South Caucasus. Armenia's economic sector has been for a long time tied to the Russian market although, currently, the Kremlin has no transportation links with Armenia.

Transportation blockade aimed to "punish" Georgia during the "spy row" last October has negatively influenced Armenia in the process.

Last year, Russia unexpectedly blocked the Kazbegi-Lars customs checkpoint - the only customs checkpoint controlled by Georgians on the Georgian-Russian border. Russian authorities argued the checkpoints needed renovations. The route continues to be blocked and it hurts not only Georgia's interests but also those of Armenia.

The checkpoint at the Roki Tunnel is not well- controlled, linking Russia with Tskhinvali separatist authorities.

Russia hoped that the Georgian administration would get accustomed to travelers and cargo passing through separatist-controlled customs checkpoints. However, the Georgian government is not supporting this idea. As a result, Russia has lost its transportation link with Armenia.

The railway connection with Russia is very important for Armenia too. Armenian experts calculated that Armenian economic sector was losing USD 500 million annually because of the closed railway via Abkhazia.

A while back, Armenia actively demanded that Georgia open the railway, although they also asked Russia to allow Georgians to control the customs checkpoints at Psou (Russian-Abkhaz border) and the Roki Tunnel. The Russian authorities did not do this and later imposed a transportation blockade.

But to support Armenia's interests, Russia was obliged to help create the Poti-Caucasus ferry route.

This ferry route doesn't make much sense as the cost to transport cargo appears to be very expensive and if the railway via Abkhazia is reopened, no one will need it.

According to the Chairman of Armenian Union of Industrialists and Entrepreneurs Arsen Kazarian, currently the Poti-Caucasus ferry route is not functioning, as it does not have any cargo to load. He also expressed dissatisfaction about the tariffs for the route.

Armenian authorities worry that the new ferry route will not last long. The Swedish company Reserve Capital Enterprising Corporation that controls the ferry intends to sell 45 percent of the shares in the near future.

According to the Armenian newspaper Aiots Ashkher, the Swedish company wants to attract funding from Armenian companies to reduce its business risk and to decrease possible losses to the company as well.

The newspaper reports that when the Poti-Caucasus ferry route was opened, the company bragged that cargo transportation would not take much time and it would be cheaper compared to the Poti-Ilichevsk ferry route. Now it is clear that the cost is approximately the same and cargo arrives in 2 days instead of 7.

At the same time the owner of the Swedish company wants to be the sole cargo transporter from Yerevan to Poti and this could put Armenians in a difficult position. If the existing problems are not solved, the Poti-Caucasus ferry route will have no future.

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Note: Above are excerpts from the article. The full article appears here. Clarifications and comments by me are contained in {}. Deletions are marked by [...]. The bold emphasis is mine.