“Needle’s eye for global trade”: How Russia, China and the EU are vying for Georgia

Since the war in Ukraine, new trade routes between Europe and China have become increasingly important to avoid going through Russia. Georgia is an important bottleneck. So the Caucasus country is planning a new Black Sea port. But the project has the potential to be geopolitically explosive.

Climate health resort and presidential status object, then a short-lived party stronghold, now the scene of geopolitical power games: this is the story of Anaglia, a small town on the Georgian Black Sea coast. Only a few hundred meters separate the town of 1,300 people from Abkhazia, a breakaway region in northwestern Georgia backed by Russia.

Former President Mikheil Saakashvili poured money into Anaglia at the turn of the millennium to make it a popular holiday destination and health resort on the Black Sea. But the concept didn’t work. After Saakashvili lost power in 2013, Georgia’s new leadership abandoned the plans.

Later, the city tried to attract young Black Sea partisans. In 2014, Kazantip, the largest techno festival in the post-Soviet space, moved here. The annual event can no longer be held in Crimea due to Russian annexation. However, the new location on the Georgian coast was not a success, and Kassandib in Anaglia was a one-time affair. The festival was not held after that.

The former prime minister and Moscow act in the background

The government finally reversed course in 2016. A large Black Sea port was to be built at Anaglia. The Georgian government budgeted 2.5 billion dollars for this, but the project was soon canceled. “There is an accusation that it was blocked by political influence. Mainly the Georgian government and the influence of Bidzina Ivanishvili and Russia,” political scientist Hannes Meissner reports on the ntv podcast “I learned something again.”

As a risk analyst, Meissner is primarily active in the post-Soviet space, inter alia advising companies considering investing in those markets. He knows Georgia well from many visits, he has good contacts in the country in the Caucasus and is aware of the special role of Bidzina Ivanishvili. The oligarch was the tiny country’s prime minister from 2012 to 2013 and is still the brains of the ruling Georgian Dream party.

A Georgian-American consortium actually won the contract for a deep-sea port at Anaglia in 2016. But construction quickly stalled because Georgian members of the consortium were accused of money laundering and the American investor backed out. In 2019, port projects were temporarily halted.

Today Anaglia is a peaceful place. Only a few hotels, restaurants and a large aqua theme park still bear witness to the grand schemes of the past. Otherwise you see lots of vacancies and half-completed constructions.

Alternative to Russia transport

After Russia invaded Ukraine a year and a half ago, the Georgian government put its ambitions for Anaglia back out of the drawer. A smart strategy as war changed trade routes. The so-called “Middle Corridor” has become an important alternative to bypass traffic through Russia. The trade route leads from Europe to China via the Black Sea, Georgia, Azerbaijan, the Caspian Sea and Kazakhstan.

A path that could make Georgia a major player in international trade policy and bring a lot of money to the country.

So far, Georgia has not been able to tap into its potential, partly because of the huge political risks for investors. “This is primarily due to the unresolved territorial conflict with Russia in the breakaway regions (Abkhazia and South Ossetia, editor’s note). “It is a nightmare for investors from the West,” says Meissner, analyzing the situation in Georgia.

Additionally, Georgia is a difficult place to invest due to constitutional issues and violations of investment protection laws and property rights.

Georgian harbors are not deep enough

The Georgian government wants to write down the problems with the construction of the new port. Anaglia was intended to become a major center in the Far East of Europe. Anaglia “could revolutionize Georgia’s role as an important transit country between Europe and Asia,” analyzes “Radio Free Europe” in a report on the country’s ambitions. So far, Georgia has been a “barrier to world trade.”

This is because the two current Georgian Black Sea ports – Poti and Badumi – are not deep enough for the largest container ships. That is why for years cargo had to be reloaded with difficulty at other Black Sea ports in Istanbul or Constanta, Romania.

But Anaglia’s main project would take years to come to fruition. It is not even known who will finance the construction of the port. Georgia’s current prime minister, Iraqi Garibashvili, describes Anaglia as his government’s “most important and ambitious project.” Tbilisi should retain a majority stake and strengthen Georgia’s role in the world market. But who will get the remaining 49 percent stake?

“Pressure on Russia increased”

The tender work has been going on since the beginning of this year. Chinese investors have also applied. China has already invested $50 million in strategic planning for the deep-sea port.

From a geostrategic perspective, the debate on port construction is highly explosive, as Georgia is a potential candidate for EU membership, but the current government is close to China and, in recent years, closer to Russia – with the covert support of the former. The head of government and oligarch Pitsina Ivanishvili.

“We have the following situation in Georgia: the ruling political elite exploits its own position of power to secretly pursue political and economic interests that are often not in the interest of the general public,” explains expert Meissner on the podcast. “There are clear signs of Russia exerting pressure here through the Ivanishvili network, in part.”

Russia knows that the “Northern Corridor”, a transport route through Russia, is losing global importance. That is why Moscow is trying to expand its influence outside its own borders. The “middle corridor” plays an important role here. Meissner reports that Russia has increased pressure on Georgia since the war in Ukraine. “There are very strong signs of this. Whether it’s the failed ‘Agents’ law so far, or the allegations against pro-European President Salome Jurapishvili, who is now being impeached.”

Brussels Rivalry with Beijing

It is conceivable, but not particularly likely, that the EU would also enter the competition for port space at Anaglia. “Offers from several international companies are currently being studied,” said David Javagadze, responsible for the port project at the Georgian Ministry of Economy, on “Radio Free Europe.”

After all, Georgia may soon be part of the European Union; The country has been a potential candidate for membership since last year.

Brussels wants to compete with the Chinese Silk Road initiative and counter it with its own infrastructure projects as part of the “Global Gateway” concept. The Georgian Black Sea coast plays an important role in this. The port of Botti – about 25 kilometers south of Anaglia – is operated by Dutch company APM Terminals and is currently the largest in the country. Larger ships will also be able to enter here in the future. The operator wants to double the capacity in powder.

“We are in an extraordinary moment of geopolitical risk around the Black Sea because of the Russian invasion,” Romana Vlahudin, a visiting analyst at the German Marshall Fund and former special representative for EU integration, was quoted by “Radio Free Europe”.

China, Russia, the European Union — they’re all vying for Georgia, a country larger than Bavaria but which has long been the scene of geopolitical power struggles.