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Black Sea Trade Nexus Could Boost Georgia’s Geopolitical Position

  • Anaklia's deep-sea port can position Georgia as a pivotal trade link between Europe and Asia amid rising geopolitical tensions.
  • The choice of construction leadership, either Western or Chinese entities, will have lasting implications for Georgia's political alignments.
  • While the project promises economic potential and regional importance, it faces competition from Poti and evokes mixed feelings from Anaklia's residents.

In the 20 years that Data Gabelia has worked at the Hotel Anaklia, he's seen the fortunes of the Black Sea resort town of 1,500 people rise and fall.

In the 2000s, he saw money pour into Anaklia as then-President Mikheil Saakashvili sought to turn it into a top vacation destination as part of a development push.

After Saakashvili lost power in 2012, the new government abandoned the bold plans for Anaklia, leaving behind a string of half-built structures and abandoned beachside hotels and restaurants.

Since then, the town has toyed with transforming itself into a site for Black Sea partygoers by hosting music festivals and summer raves. But they have all since relocated -- leaving the western Georgian town behind.

“In the time that I’ve been here, the trend is that things seem to be moving backwards, not forwards,” Gabelia told RFE/RL.

But now Anaklia may be donning a new identity, this time as an unlikely site for geopolitical intrigue that could place Georgia at the epicenter of a global competition for trade routes and infrastructure.

This is because the government has revived an ambitious and controversial plan to build a deep-sea port at Anaklia amid amplified interest in international trade following Moscow’s full-scale invasion of Ukraine, where Western sanctions on Russia -- the pathway for the majority of transcontinental trade -- have left freight companies and governments eyeing new routes.

If successful, it could revolutionize Georgia’s role as a key transit point between Europe and Asia and loosen the country’s status as a bottleneck for global trade.

The megaproject’s future is also caught up in political controversy at home and geopolitical jostling abroad over who will build it. This could have far-reaching fallout for Tbilisi as it seeks candidate status with the European Union and has been worrying Brussels by building closer ties with Russia in recent years while also increasingly turning to Chinese companies to build its large-scale infrastructure.

With the bidding process opened, Anaklia could become an important bellwether to determine if Georgia continues down a path of further integration with the European Union and the West or pivots toward closer ties with Russia and China.

“We are in an abnormal moment of geopolitical risk around the Black Sea [because of] Russia’s invasion,” Romana Vlahutin, a visiting fellow at the German Marshall Fund and former EU special envoy for connectivity, told RFE/RL. “It’s hard to plan for something when things are this volatile, but we know that what we don’t do, others will.”

The leading alternative to avoid transit through Russia is through the so-called Middle Corridor, which connects China and the countries of Central Asia to Europe through Georgia and Azerbaijan.

The route has also received enhanced interest from Brussels, which is looking to fund strategic infrastructure that cuts Russia out of its trade networks and would compete with China’s Belt and Road Initiative (BRI), the global development project worth hundreds of billions of dollars that Beijing has used to build infrastructure and grow its influence.

“If [Brussels] is serious about making the Middle Corridor happen, then you can’t really do it without Anaklia,” Vlahutin told RFE/RL.

Scandal And Struggle Over Anaklia

Georgia’s strategic location on the eastern edge of the Black Sea has made it particularly crucial for the Middle Corridor to take off and has pushed connectivity to the top of the country’s foreign policy agenda.

But the country has a dearth of high-quality infrastructure that has so far held back its transit potential, with long lines of trucks at its borders and ports at Batumi and Poti operating near capacity as trade along the route has steadily increased since 2022.

This has led to organizations like the European Bank for Reconstruction and Development and the World Bank warning that without a deep-sea port in Georgia -- which would allow larger ships to transport increased volumes at a more efficient rate -- neither the country nor the Middle Corridor will be competitive as a global trade route.

Against this backdrop, the Georgian government began talking about reviving the project in 2022. Prime Minister Irakli Garibashvili, who returned to office in 2021 for his second stint as head of government, said that building the port in Anaklia is his government’s “main and ambitious priority” and opened a call for bidders on a new iteration of the project earlier this year, saying the government would retain a 51 percent stake.

The move caught some observers by surprise given that a previous attempt by a consortium between Georgia’s TBC Bank and U.S.-based Conti International to build a deep-sea port in Anaklia was canceled by the government in 2020 after being mired in controversy for years.

The consortium was founded in 2017 by a banker-turned-opposition politician Mamuka Khazaradze, who set up the Lelo for Georgia in 2019. Shortly after that, money laundering charges were brought against him and his partner, Badri Japaridze, who co-founded TBC -- Georgia's biggest bank -- with Khazaradze.

Following the charges, the American investor pulled out and the project ground to a halt until the government canceled the $2.5 billion port contract. In 2022, a court found Khazaradze and Japaridze guilty of fraud, but they were both released without prison time.

Khazaradze has claimed the authorities were trying to sabotage the project and that the real issue behind the dispute is his personal conflict with Bidzina Ivanishvili, the billionaire former prime minister who leads the Georgian Dream party that has been in power since 2012.

Speculation also spread in Georgian media that Russia had pressured Tbilisi to end the venture as Moscow would not welcome a port backed by a U.S. company on the Black Sea or one that would compete with its own port further north in Novorossiisk.

Khazaradze declined RFE/RL’s interview request but is currently taking the government to an arbitration court in London over what he maintains were politically motivated charges to derail the port. He’s been an outspoken critic of the project’s revival and believes it is unlikely to attract sufficient investment given the legal roadblocks his case could bring against it and the government’s desire to hold a 51 percent stake in the port.

Who Will Build Anaklia’s Port?

Despite this unfolding controversy, the bidding process for the Anaklia project is under way.

The deadline for proposals passed in June and they are currently being reviewed, David Javakhadze, the director of the LEPL Anaklia Deep Sea Port Development Agency within Georgia’s Economy and Sustainable Development Ministry, told RFE/RL.

“Several international companies have expressed their interest toward the project, including a consortium consisting of several companies,” Javakhadze said in e-mailed comments that did not say which companies submitted bids.

Once selected, the deep-sea port would take years to be completed and likely cost billions of dollars. In the meantime, attention is focused on which companies -- and their country of origin -- will be selected.

Chinese firms are particularly emerging as potential bidders. Chinese companies had previously approached Khazaradze’s consortium about building the port and interest in Georgia has only grown since the disruption to reliable trade routes due to the war in Ukraine. During an interview in late 2022, Zhou Qian, China’s ambassador to Tbilisi, said Anaklia was important for the success of the Middle Corridor and that the embassy would encourage Chinese firms to place bids.

Tbilisi’s interest in China appears to be growing, too, with Garibashvili upgrading Georgia’s ties with Beijing to a strategic partnership during a July trip to Chengdu -- a development that has only added to speculation that a Chinese-led bid could be chosen to build the port.

Doing so could come with fallout for Tbilisi’s relations with Brussels, especially as it awaits the EU’s decision in December on its bid for membership-candidate status.

Tbilisi’s relationship with Brussels and Washington has become strained in recent years amid increased anti-Western rhetoric, concerns over the rule of law, the government’s neutral stance toward the Ukraine war, deepening relations with Russia, and democratic backsliding by the ruling Georgian Dream party.

In February, the government tried to pass a controversial “foreign agents” bill that copied a similar law infamously introduced in Russia in 2012 that branded media, NGOs, individuals, and other civil society organizations that receive more than 20 percent of their funding from foreign sources as “agents of foreign influence.” The government backed down and withdrew the bill in March following sustained street protests and international condemnation, with Brussels saying that it was incompatible with EU values.

Similar concerns were raised in May about warming ties with Moscow when the Kremlin unexpectedly abolished visas for Georgian nationals and lifted a flight ban unilaterally imposed in 2019 after a wave of anti-Kremlin protests in Georgia.

In response, the government resumed direct flights with Russia despite relations being rocky since Moscow invaded Georgia in 2008, with Tbilisi losing control of two Russian-backed separatist regions. EU spokesman Peter Stano told reporters following the move that it raised “concerns about Georgia’s EU path.”

Asuncion Sanchez Ruiz, deputy head of mission of the EU delegation to Georgia, says a similar litmus test will come in choosing the winning bid for the Anaklia deep-sea port. The project has been selected within Global Gateway, Brussel’s infrastructure financing answer to China’s BRI, and she says that the EU has a strong preference to see European firms involved in the port.

“Georgia has applied to the EU and whoever the final investor is, we need to make sure that it’s in line with the [EU-Georgia] Association Agreement,” Sanchez Ruiz told RFE/RL during an interview in Tbilisi, referring to the 2016 deal that grants Georgia access to some sectors of the European Single Market as well as visa-free travel to the bloc.

“If what is chosen is not in-line with the EU -- a club that Georgia wants to join -- then that should help tell us about the direction this government is heading towards,” she said.

Big Hopes And Shattered Dreams

Amid the palm trees that dot Anaklia and the boardwalk that was meant to showcase it as a seaside destination, the marks of the aborted attempt to build Georgia’s first deep-sea port can still be seen in the town.

Maya Svanidze, a 60-year-old resident of Anaklia who operates a guest house for summer tourists, remembers the optimism that took the town as promises of new jobs and development were attached to the ambitious project.

Like many residents on Anaklia’s southwestern edge, she was offered a government payout to sell her home to make room for the operational grounds of the port. Svanidze accepted the money, which she said was enough to relocate and buy a new house just a few minutes away. She moved there with her family in 2018.

As ground was broken, mountains of earth and sand were moved and piled up within the new sprawling, fenced-off construction site. Then it all stopped -- but the sand stayed.

The sand has since become a major nuisance for locals, with regular gusts of wind from the sea spreading it into houses, drains, and cars for those who live nearby. Svanidze and others have raised the issue with officials, but the piles of sand have remained.

“I would be happy to see this port get built and this sand and dust finally be gone,” Svanidze told RFE/RL. “But things have been promised before and they don’t always come about. So, I’ll believe it when I see it.”

Meanwhile, the Anaklia project is also facing competition from Poti, the country’s largest port that currently serves as the main hub for Georgia’s international trade.

APM Terminals, the Netherlands-based operator of the port in Poti, announced plans to double its capacity and allow for bigger ships to enter.

It is currently in the final stages of talks with the government on the expansion, which could upgrade Poti’s capacity and help unclog the current shipping bottleneck, though its narrow entrance could still limit the amount of ships compared to the plans for Anaklia.

APM Terminals did not respond to RFE/RL’s request for comment.

Roman Gotsiridze, an opposition lawmaker with the United National Movement, says it's unclear if Georgia would need both projects, even with the uptick in trade across the Middle Corridor.

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That’s why, he says, his focus of the last several months has been in trying to get answers from the government over the Anaklia project and to push for a formal investigation for more details on the plans to be revealed.

But those efforts have not yielded much. He says the government has been reluctant to answer the opposition’s questions about the port and in some cases has turned to loopholes to avoid appearing in parliament or simply not turned up for the constitutionally mandated question period.

In the meantime, he says he will be watching the tender process closely to see what kind of bids get put forward.

“My concern is that a bid from a Western country won’t be chosen and instead it will be from a country that can reach some sort of agreement with Russia,” Gotsiridze told RFE/RL.

“China, a [Persian] Gulf country, or a combination of them together are all possibilities.”

By Reid Standish via RFE/RL

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