In all likelihood, the Georgian government has decided to seriously deal with the project of constructing the strategically important deep-sea Port of Anaklia, which was suspended in 2020 when the government canceled the $2.5 billion contract with previous investor Anaklia Development Consortium (ADC) (Eurasianet, January 9, 2020).
At an official government meeting on December 12, 2022, Georgian Prime Minister Irakli Garibashvili announced that the Anaklia port will be built by the state with 51-percent ownership of shares, while the rest will be made available to international partners through a tender process. Later on, speaking on the necessity of reviving the project, during the presentation of the annual report on the Georgia government’s performance, Garibashvili declared that, in terms of alienating the seaports in Batumi and Poti under private ownership, when the state cannot set any tariff regulations, construction of the port at Anaklia is crucial to meet the needs of diversifying the existing transport routes and developing new ones (Civil.ge, December 27, 2022).
The ongoing diversion of transport corridors away from Russia to the alternative routes in Central Asia and the Caucasus, with Georgia as a key transit point, most likely bolstered the revitalization of the Anaklia port project (see EDM, September 15, 2022). In addition, Tbilisi had to adhere to Article 7 of the revised Constitution of Georgia—“Basics of Territorial Organization”—which envisages a special economic zone and legal regime in Anaklia. It is worth noting that reference to the Anaklia project in the constitution was insisted on by the Georgian government in 2017, after long and heated discussions with the ruling Georgian Dream party (For.ge, November 17, 2017).
When announcing this decision on Anaklia, Garibashvili solely accused the ADC for its failure to implement the port project. ADC hit back in a statement, saying that the government’s new plan on Anaklia is doomed to fail, as the arbitration dispute between the state and the ADC is ongoing due to Tbilisi’s suspension of the contract (Netgazeti, July 30, 2020).
Since its inception, the Anaklia deep-water seaport project has become a subject of internal political squabbles and clashes of geopolitical interests in the region (see EDM, May 20, June 18, 2019; March 16, 2020). In a letter signed by four US representatives addressed to the Georgian government in 2020, it was emphasized that the framing of ADC, which is backed by the United States, as a political target by the ruling GD party “scares and hinders the investments of American companies” in this critical project (Netgazeti, January 22, 2020).
Yet, controversies surrounding the construction of a port at Anaklia arose at the very inception of the project. At the time, then–Georgian Minister of Economy and Sustainable Development Giorgi Kobulia pointed out that the Anaklia deep-sea port project would be “too difficult” for ADC to implement (Bm.ge, April 15, 2019). Kobulia added that the issue became problematic after investors started to calculate the actual “commercial profitability” of the Anaklia project (Agenda.ge, October 20, 2019). According to the Georgian official, it was a grave mistake to include Anaklia in the state constitution, thereby assigning huge value to the project.
Had the Anaklia port project been completed within the planned timeframe, it was expected to receive its first vessels by 2021 and, as a result, could have significantly transformed the transportation and logistics landscape in Georgia by offering reliable infrastructure and competitive costs (Silkroadbriefing.com, July 4, 2018).
For his part, Georgian Minister of Sustainable Development and Economy Levan Davitashvili further clarified the government’s approach and expectations with regards to the Anaklia deep-water seaport. According to Davitashvili, Tbilisi is currently negotiating with several potential investors, and government officials expressed hope that construction of the port would begin in 2023. Most likely in February, the government is expected to start selecting potential partner investors. Davitashvili mentioned that five out of the top 10 operators of seaports globally (e.g., Singapore’s port operator API, Abu Dhabi Ports and others) have expressed interest in participating.
According to the Georgian government minister, Tbilisi is considering several options for funding the portion of the port that will be fulfilled by the government; one option might be a pension fund. Currently, the Georgian authorities are considering a three-stage plan for completing the port, which, according to Davitashvili, will take about 10 years (Interpressnews, December 30, 2022; Bm.ge, January 6).
The European Bank for Reconstruction and Development (EBRD) may also consider investment possibilities for the Anaklia port. EBRD President Odile Renaud-Basso stated that Georgia needs to increase its port capacity and carry out a comprehensive modernization strategy. As Renaud-Basso noted, one option for this expansion would include successful construction of the Port of Anaklia. The EBRD president expressed potential willingness to “assess the bankability” of the project if EBRD involvement is indeed requested by Tbilisi (Bm.ge, September 15, 2022)
Overall, the Georgian government brushes away the ADC’s skepticism about foreign investments regarding ongoing litigation as well as fears of political opponents that Russian companies disguised as Western entities may “hide” among potential investors. In 2021, PortSEurope provided analysis that argued, “The Anaklia Deep Sea Port project did not have a chance fighting for its survival against Georgia’s political class, heavily influenced by Moscow, which did not want a facility capable of hosting US [United States] and NATO [North Atlantic Treaty Organization] military ships, or a competitor to its own Black Sea cargo ports” (PortSEurope, January 3, 2021). Yet, in 2019, then-US Secretary of State Mike Pompeo openly communicated with the Georgian government regarding Washington’s desire to support the construction of the Port of Anaklia “to prevent Georgia from falling prey to Russian or Chinese economic influence.” This statement caused an acute reaction from Moscow about US meddling in the region (Georgia Today, June 13, 2019; Agenda.ge, June 14, 2019).
Indeed, the transport potential of Georgia has not yet been fully realized. In terms of real possibilities for attracting additional transit, Georgia still does not have a strategic document in the field of transport, despite the fact that the state recognizes the development of a transport corridor as one of its top priorities. At the end of 2022, the Georgian Ministry of Economy announced it was beginning work on the National Transport and Logistics Strategy of Georgia for 2023–2030, having canceled the previously elaborated strategy for 2021–2030. However, it is unknown when this document will enter into force. Now that the Anaklia project has been brought back on the agenda, it is critical for all domestic stakeholders not to make this project, once again, a victim of political acrimony and geopolitical speculation.
By the Jamestown Foundation
More Top Reads From Oilprice.com:
- Extremely Tight Market Could Push Copper Prices To Record Highs
- Liberty Steel Restructuring Sparks Output Uncertainty
- Ofgem Vows To “Name And Shame” Firms Leaving Customers Without Heat