Karabakh lessons for Georgias economic

Zurab Garakanidze

Journal number 3 ∘ Zurab Garakanidze ∘
Karabakh lessons for Georgias economic

10.36172/EKONOMISTI.2021.XVII.03.GARAKANIDZE

Expanded Summary

Eight months have passed since the Karabakh war, and there is not yet seen a publication on its possible positive or negative impact on the Georgian economy. This article is an attempt to intensify geoeconomic research on this topic, take political steps in the nearest future, etc. This year the events have developed so dynamically that it is already necessary to reflect the new political reality created in the South Caucasus, after the second so-called Karabakh conflict. This 44-day war, and also the recent elections in Armenia and Iran and the declaration of the withdrawal of US troops from Afghanistan by September 1, 2021 bring these new realities in region. The fact is that the newly elected government of Armenia does not hide that it will try to open transport communications with Azerbaijan and Turkey - construction of a new Megri-Tabriz railway corridor parallel to the Baku-Astara road to Iran. Therefore, Tehran is a competitor of the Baku-Megri (Syunik region of Armenia, former Zangezur district) - the Turan Gate of Nakhichevan. With this new route Iran will avoid the Baku monopoly on the already operating Azerbaijani traffic corridor Derbent-Baku-Astara and its "Transit Dictatorship" will be balanced by the Tabriz-Megri railway. We believe that the National Security Council, as an inter-agency advisory body, with the support of Parliament's Economic Profile, Security and European Integration Committees, should work to make use of these new realities for the benefit of the country. What are the most relevant directions?

Experts, in the light of the financial problems of global energy projects, did not rule out the possibility of their transformation into various forms in order to reduce the cost of EU "Southern Gas Corridor" projects. One such transformational idea is to combine European and Russian gas pipelines to improve financial security. This issue was first raised in early 2010. On January 10, 2011, U.S. Ambassador to Italy D.C. Thorn again ousted him. Unfortunately, this project was not discussed in Georgia by the government or the parliament, and discussions took place only in expert circles. The idea of such a merger was openly rejected in Russia at the time, but behind the scenes information, the problems now facing North Stream 2 could act as a catalyst and force Gazprom to send part of its gas to the European market via much lower-cost routes. Of these projects, only the least developed, at the idea level, of the White Stream, the Georgia-Ukraine-Romania gas pipeline was associated with Ukraine, which is not feasible under the annexation of Crimea. Moreover, the capacity of the Ukrainian gas network is limited. According to experts, transit through Ukraine will soon not be able to fully meet Europe's growing demand for gas.

Therefore, the unification of Russian and European projects not through Ukraine, but in another format, can now be supported by Russia. Experts have already speculated that Moscow may start looking for a place to connect Russian gas to the European "corridor" gas pipelines.

At present, the only place where the western routes of Russia and the Caspian gas intersect is Georgia. On the one hand, the "North-South Main Gas Pipeline" runs through Georgia. From Mozdok it is connected with Armenia through the territory of Georgia. On the other hand, it crosses the EU's South Caucasus Gas Pipeline (SCP) between Gardabani and Jandara, which currently supplies both Shah Deniz gas stages not only to Turkey but also through the TANAP and TAP pipelines to EU member states (see Figure 1). ). Georgia receives 5% of the gas from the SCP gas pipeline as a transit fee free of charge, 5% at a reduced price.

The Kars-Igdiri-Nakhchivan railway line, as an extension of the Baku-Tbilisi-Kars railway, will be much more efficient than the reconstruction-reconstruction of the Kars-Gyumri-Nakhichevan-Megri-Baku Soviet railway. At the same time, it should be noted that it is in the interests of Russia and Armenia not to restore the Baku-Tbilisi-Akhalkalaki-Kars, but the Adler-Tbilisi-Gyumri-Kars route and connect Gyumri not only with Turkey but also with Iran.

The same can be said about Turkey's participation in the "One Road, One Belt" global project. Ankara also has conflicts in the neighborhood and in other Mediterranean regions. Even expressing Turkey's desire to involve Turkey in the One Road, One Belt projects in Central Asia, amid the conflicts it has discussed above, is likely to complicate already strained relations with Ankara, Moscow and Beijing.

Thus, the discussion of the issue of land transport also needs the coordination of the Parliament's Economic Profile, Security, European Integration Committees and the staff of the National Security Council. What is the maritime dimension of the Turan Gate?

Environmental problems became especially acute in the Bosphorus Strait in 1994 after the crash of a Cypriot-flagged tanker, the Nassia, when hundreds of thousands of tons of oil were pumped into the Straits. In the center of Istanbul, the Bosphorus overflowed and threatened a multimillion-dollar megalopolis with ecological catastrophe. Since then, there has been talk of building a canal on the Bosphorus in Turkey and establishing an "Strait Ecological Fund". At the same time, restrictions were imposed "unobtrusively" on swimming "... merchant ships" mentioned in the "Montreux Convention". For example, tankers can swim in the Bosphorus only in broad daylight, it is forbidden to move in the strait of tankers longer than 200 meters without a pilot. It was later established that oil and liquefied gas tankers in the strait should have dual bottoms and special lighting, and so on. Sh.

Thus, Turkey has been using navigation restrictions for a long time, and it is possible that the idea of establishing the "Strait Ecological Fund" announced a few years ago, which involves paying a fee for crossing the Bosphorus from tankers, will be revived. Now Ankara is explaining the imposition of this fee by joining various environmental conventions in Turkey.

At first glance, the "Istanbul Channel" will also create some problems for Georgian ports in terms of possible increase in navigation in the Black Sea. However, the construction of a 44-kilometer-long, 275-meter-wide and 20.75-meter-deep canal in Istanbul could make a "contribution" to the development of the Abkhazian section of the Georgian Railway. Russia is primarily interested in its implementation, because in this way it will get access to the highways of strategic allies - Armenia, Iran, Syria. With the Georgian Railway, Russia will also be able to export oil products to the West instead of tankers by land - Baku-Tbilisi-Akhalkalaki or Baku - under the Bosphorus-Dardanelles, expected annual oil quotas (ecological restrictions), or paid "Istanbul Canal". - to divert oil flow in the Ceyhan oil pipeline through the Georgian-Turkish territory.

The fact is that the construction of this canal will restrict free movement in peacetime on the Bosphorus and Dardanelles Straits (which, as mentioned above, are considered neutral waters by the 1936 Montreux Convention and the 1982 UN Maritime Convention) and Russian and Kazakh Oil transportation must start through the new "Istanbul Canal", which will be very expensive ...

On the one hand, Turkish officials have repeatedly stated that the Istanbul Canal has nothing to do with the admission of warships under the Montreux Convention signed in 1936, and also ruled out forcing anyone to use the new canal instead of the Bosphorus. Article 2 of the Montreux Convention states: "In peacetime, merchant ships flying under any flag may enter and navigate the Straits freely." But, the above-mentioned convention does not say anything about ecological restrictions, since at that time the environment was less thought about.

On the other hand, in Turkey there is already a so-called Strait Ecological Fund project and restrictions on navigation on the Bosphorus. International oil companies of Russia and Kazakhstan are already looking for a way to bypass the Straits and the "Istanbul Canal"! The most realistic is the transfer of oil from Novorossiysk via Abkhazia to Turkey - by land. Sokhumi, Moscow and Astana will be interested in this.

Reconstruction of the Abkhazian section of the Georgian Railway, or the connection of the Caspian Pipeline Consortium (CPC) with the Baku-Tbilisi-Ceyhan oil pipeline, is in the interests of Kazakhstan and American and European oil companies operating there. The fact is that at the end of 2016, the reconstruction of the CPC Tengiz-Atyrau-Novorossiysk oil pipeline was completed. Its annual capacity has grown from 25 million tonnes to 67.5-70 million tonnes and will soon reach 83 million tonnes.11 This project was launched in 2011 in St. Petersburg. The floods in the Krimsky district have been hampered, though its operation is currently underway successfully. Transportation of hydrocarbons from Kazakhstan's Tengiz, Kashagan, Kumkol and Karachaganak via the Turkish Straits by tankers is likely to be for ecological reasons (one big ship will pass through the Bosphorus in the center of Istanbul every 12 minutes, every third of which is a tanker. The price will not stop soon. Redirect.

Thus, the only solution is to load Kazakh and Russian oil into the Baku-Tbilisi-Ceyhan oil pipeline from Novorossiysk by rail, via Abkhazia, or through a new oil pipeline. Russia and Kazakhstan are likely to raise the issue with the Georgian government before the construction of the Istanbul Canal is completed. Thus, in the presence of a strong energy lobby in the Kremlin and Astana, Georgia will have the prospect of a peaceful solution to the Abkhaz problem (by the way, the idea of resolving the Abkhaz conflict by laying an oil pipeline to Turkey via Abkhazia back in 1992, E. Shevardnadze).

EKONOMISTI The international scientific and analytical, reviewed, printing and electronic journal of Paata Gugushvili Institute of Economics of Ivane Javakhishvili Tbilisi State University

DOI: 10.36172/EKONOMISTI E ISSN 2346-8432 Print ISSN 1987-6890	Journal number 3 ∘ Zurab Garakanidze ∘ Karabakh lessons for Georgias economic 10.36172/EKONOMISTI.2021.XVII.03.GARAKANIDZE Expanded Summary Eight months have passed since the Karabakh war, and there is not yet seen a publication on its possible positive or negative impact on the Georgian economy. This article is an attempt to intensify geoeconomic research on this topic, take political steps in the nearest future, etc. This year the events have developed so dynamically that it is already necessary to reflect the new political reality created in the South Caucasus, after the second so-called Karabakh conflict. This 44-day war, and also the recent elections in Armenia and Iran and the declaration of the withdrawal of US troops from Afghanistan by September 1, 2021 bring these new realities in region. The fact is that the newly elected government of Armenia does not hide that it will try to open transport communications with Azerbaijan and Turkey - construction of a new Megri-Tabriz railway corridor parallel to the Baku-Astara road to Iran. Therefore, Tehran is a competitor of the Baku-Megri (Syunik region of Armenia, former Zangezur district) - the Turan Gate of Nakhichevan. With this new route Iran will avoid the Baku monopoly on the already operating Azerbaijani traffic corridor Derbent-Baku-Astara and its "Transit Dictatorship" will be balanced by the Tabriz-Megri railway. We believe that the National Security Council, as an inter-agency advisory body, with the support of Parliament's Economic Profile, Security and European Integration Committees, should work to make use of these new realities for the benefit of the country. What are the most relevant directions? Experts, in the light of the financial problems of global energy projects, did not rule out the possibility of their transformation into various forms in order to reduce the cost of EU "Southern Gas Corridor" projects. One such transformational idea is to combine European and Russian gas pipelines to improve financial security. This issue was first raised in early 2010. On January 10, 2011, U.S. Ambassador to Italy D.C. Thorn again ousted him. Unfortunately, this project was not discussed in Georgia by the government or the parliament, and discussions took place only in expert circles. The idea of such a merger was openly rejected in Russia at the time, but behind the scenes information, the problems now facing North Stream 2 could act as a catalyst and force Gazprom to send part of its gas to the European market via much lower-cost routes. Of these projects, only the least developed, at the idea level, of the White Stream, the Georgia-Ukraine-Romania gas pipeline was associated with Ukraine, which is not feasible under the annexation of Crimea. Moreover, the capacity of the Ukrainian gas network is limited. According to experts, transit through Ukraine will soon not be able to fully meet Europe's growing demand for gas. Therefore, the unification of Russian and European projects not through Ukraine, but in another format, can now be supported by Russia. Experts have already speculated that Moscow may start looking for a place to connect Russian gas to the European "corridor" gas pipelines. At present, the only place where the western routes of Russia and the Caspian gas intersect is Georgia. On the one hand, the "North-South Main Gas Pipeline" runs through Georgia. From Mozdok it is connected with Armenia through the territory of Georgia. On the other hand, it crosses the EU's South Caucasus Gas Pipeline (SCP) between Gardabani and Jandara, which currently supplies both Shah Deniz gas stages not only to Turkey but also through the TANAP and TAP pipelines to EU member states (see Figure 1). ). Georgia receives 5% of the gas from the SCP gas pipeline as a transit fee free of charge, 5% at a reduced price. The Kars-Igdiri-Nakhchivan railway line, as an extension of the Baku-Tbilisi-Kars railway, will be much more efficient than the reconstruction-reconstruction of the Kars-Gyumri-Nakhichevan-Megri-Baku Soviet railway. At the same time, it should be noted that it is in the interests of Russia and Armenia not to restore the Baku-Tbilisi-Akhalkalaki-Kars, but the Adler-Tbilisi-Gyumri-Kars route and connect Gyumri not only with Turkey but also with Iran. The same can be said about Turkey's participation in the "One Road, One Belt" global project. Ankara also has conflicts in the neighborhood and in other Mediterranean regions. Even expressing Turkey's desire to involve Turkey in the One Road, One Belt projects in Central Asia, amid the conflicts it has discussed above, is likely to complicate already strained relations with Ankara, Moscow and Beijing. Thus, the discussion of the issue of land transport also needs the coordination of the Parliament's Economic Profile, Security, European Integration Committees and the staff of the National Security Council. What is the maritime dimension of the Turan Gate? Environmental problems became especially acute in the Bosphorus Strait in 1994 after the crash of a Cypriot-flagged tanker, the Nassia, when hundreds of thousands of tons of oil were pumped into the Straits. In the center of Istanbul, the Bosphorus overflowed and threatened a multimillion-dollar megalopolis with ecological catastrophe. Since then, there has been talk of building a canal on the Bosphorus in Turkey and establishing an "Strait Ecological Fund". At the same time, restrictions were imposed "unobtrusively" on swimming "... merchant ships" mentioned in the "Montreux Convention". For example, tankers can swim in the Bosphorus only in broad daylight, it is forbidden to move in the strait of tankers longer than 200 meters without a pilot. It was later established that oil and liquefied gas tankers in the strait should have dual bottoms and special lighting, and so on. Sh. Thus, Turkey has been using navigation restrictions for a long time, and it is possible that the idea of establishing the "Strait Ecological Fund" announced a few years ago, which involves paying a fee for crossing the Bosphorus from tankers, will be revived. Now Ankara is explaining the imposition of this fee by joining various environmental conventions in Turkey. At first glance, the "Istanbul Channel" will also create some problems for Georgian ports in terms of possible increase in navigation in the Black Sea. However, the construction of a 44-kilometer-long, 275-meter-wide and 20.75-meter-deep canal in Istanbul could make a "contribution" to the development of the Abkhazian section of the Georgian Railway. Russia is primarily interested in its implementation, because in this way it will get access to the highways of strategic allies - Armenia, Iran, Syria. With the Georgian Railway, Russia will also be able to export oil products to the West instead of tankers by land - Baku-Tbilisi-Akhalkalaki or Baku - under the Bosphorus-Dardanelles, expected annual oil quotas (ecological restrictions), or paid "Istanbul Canal". - to divert oil flow in the Ceyhan oil pipeline through the Georgian-Turkish territory. The fact is that the construction of this canal will restrict free movement in peacetime on the Bosphorus and Dardanelles Straits (which, as mentioned above, are considered neutral waters by the 1936 Montreux Convention and the 1982 UN Maritime Convention) and Russian and Kazakh Oil transportation must start through the new "Istanbul Canal", which will be very expensive ... On the one hand, Turkish officials have repeatedly stated that the Istanbul Canal has nothing to do with the admission of warships under the Montreux Convention signed in 1936, and also ruled out forcing anyone to use the new canal instead of the Bosphorus. Article 2 of the Montreux Convention states: "In peacetime, merchant ships flying under any flag may enter and navigate the Straits freely." But, the above-mentioned convention does not say anything about ecological restrictions, since at that time the environment was less thought about. On the other hand, in Turkey there is already a so-called Strait Ecological Fund project and restrictions on navigation on the Bosphorus. International oil companies of Russia and Kazakhstan are already looking for a way to bypass the Straits and the "Istanbul Canal"! The most realistic is the transfer of oil from Novorossiysk via Abkhazia to Turkey - by land. Sokhumi, Moscow and Astana will be interested in this. Reconstruction of the Abkhazian section of the Georgian Railway, or the connection of the Caspian Pipeline Consortium (CPC) with the Baku-Tbilisi-Ceyhan oil pipeline, is in the interests of Kazakhstan and American and European oil companies operating there. The fact is that at the end of 2016, the reconstruction of the CPC Tengiz-Atyrau-Novorossiysk oil pipeline was completed. Its annual capacity has grown from 25 million tonnes to 67.5-70 million tonnes and will soon reach 83 million tonnes.11 This project was launched in 2011 in St. Petersburg. The floods in the Krimsky district have been hampered, though its operation is currently underway successfully. Transportation of hydrocarbons from Kazakhstan's Tengiz, Kashagan, Kumkol and Karachaganak via the Turkish Straits by tankers is likely to be for ecological reasons (one big ship will pass through the Bosphorus in the center of Istanbul every 12 minutes, every third of which is a tanker. The price will not stop soon. Redirect. Thus, the only solution is to load Kazakh and Russian oil into the Baku-Tbilisi-Ceyhan oil pipeline from Novorossiysk by rail, via Abkhazia, or through a new oil pipeline. Russia and Kazakhstan are likely to raise the issue with the Georgian government before the construction of the Istanbul Canal is completed. Thus, in the presence of a strong energy lobby in the Kremlin and Astana, Georgia will have the prospect of a peaceful solution to the Abkhaz problem (by the way, the idea of resolving the Abkhaz conflict by laying an oil pipeline to Turkey via Abkhazia back in 1992, E. Shevardnadze).