“A game changing project,” – these are the very words for “Anaklia Port”. However, today we don’t know what game would have changed if Anaklia, a deepwater seaport had been built. The project, which was to create 60 bn USD economic value in the next 50 years, has been suspended indefinitely. Therefore, we can only imagine the changes the construction of a large-scale seaport in Anaklia would have brought to Georgia: a massive cargo influx, huge investments and, eventually, Georgia’s strengthened ties with the West.

Georgia is the only country in the Black Sea basin that has no deepwater seaport. It’s due to this that 65% of the cargo ships entering the Black Sea do not call in at the Georgian ports.

One of the deepest ports on the Black Sea coast to have sprawled on 400 ha in Anaklia, close to Abkhazia would have serviced the Panamax and post-Panamax type vessels.

Moreover, the project was not only about the seaport. Anaklia free industrial zone of 600 ha was envisaged as well.

The project involved several directions:

A 50 year master plan reflecting comprehensive vision of the project set out its economic impact, the volume of investments, anticipated cargo turn-over and 9 development phases. According to it, the Anaklia seaport was to have created 60 bn USD economic value in the next 5 decades.

In phase I to have been launched in 2020-2021, the port would have created over 2300 jobs, while by 2069, the number of the employees would have reached 19 500.

As to the carrying capacity of the port, in the final phase it should have reached 100 M tons.

“October 3, 2016 highlights the start of the construction of the deepwater seaport in Anaklia,” – says a roll placed in a special capsule buried in the Anaklia shore. The port was to have been built by Anaklia Development Consortium, the company established jointly by a Georgian “TBC Holding” and the US “Conti International”.

The company performed a comprehensive survey of the project territory and the preconstruction works; together with the foreign and local experts drew up the master plan, the draft project, the development regulation plan, carried out over 50 hydro -engineering flora and fauna investigations; the company assessed how much the project was going to influence the local flora, fauna, the sea bottom and soil, and it was based on the assessment that the draft project and environment impact report were developed. By December 2017, a 190 M USD investment had been attracted, the US SSA Marine port terminal operator selected, development of Anaklia City and a Special Economic Zone started, preliminary contracts executed with the strategic partners: a major Chinese company, the Korean and European logistical and transportation firms, the Black and Caspian seaports.

The construction of the deepwater seaport in Anaklia was launched in December 2017. In its statement of 15 February 2018, the Anaklia Development Consortium stated: “the construction the Georgian public anticipated for so long has started and it is irreversible…”

According to the investment contract executed by the Georgian Government and the Anaklia Development Consortium, in 2018, the Consortium was transferred the investment territory for the term of 52 years whereupon, the port was to have been returned to the State.

In September 2018, “Athena,” one of the world’s biggest dredgers started the first stage of the large-scale marine works. Up to 5 M m2 sand reclaimed from the sea bottom was dumped on 100 ha shore (the size of 160 football grounds). Van Oord, the world’s leading marine infrastructure company carried out the marine construction. The sand removed by vertical drainages presses the ground and drives the water out. The company managed to complete the sand removal and dumping in less than two months.

While discussing the strategic and commercial significance of Anaklia seaport, we should focus on five key directions:

In August 2019, “Conti International” decided to pull out of the Consortium. Having postponed the Consortium’s liability meeting deadlines several times, on 9 January 2020, it was declared that the Government resolved to start termination procedures of the investment contract executed with the Consortium on October 3, 2016. The statement made by the Regional Development and Infrastructure Ministry said that the Consortium: “failed to meet the liability under section 7 of the Investment Contract, namely, did not attract 120 M USD to replenish own capital, submit the contracts with the international banks on issuance of 400 M USD loan, the first phase terminal operator and the construction contractor, which entitled the Government to abrogate the contract.

Meanwhile, Mr. Levan Akhvlediani, Director General of the Consortium claimed that it had been able to rouse interest of quite a few investors, who merely asked the Government to create “but a small comfort”, which it did not.”

It should be said that after the charges of the alleged money laundering brought against Messrs. Mamuka Khazaradze and Badri Japaridze, founders of TBC Group, many analysts predicted the termination of the contract.

Speaking about the Consortium’s alleged failure to meet its liabilities, Mr. Mamuka Khazaradze said the rhetoric had paved way to the termination of the Anaklia seaport project.

Meanwhile, the Constitution states that a special organic law is to regulate the operation of Anaklia. But why don’t they adopt it? It does not need an investor, does it? It’s the Parliament’s job to adopt laws, but the ruling “Georgian Dream” party has the majority there. The project is not in their interests, but I’m pretty sure that right after the change of power, the it will be resumed,” Mr.Khazaradze says.

What would Anaklia, Samegrelo province and the entire Georgia look like had the deepwater seaport been built? Mr. Khazaradze replies:”given the pace we were moving forward, in 2020, the first ship was to have called in, which means that by then 700M USD would have been invested. Several thousand construction workers had already been employed, the locals would have been contracted after the port started operation; development of Anaklia City would have started, too. The Japanese Government had funded the Free Economic Zone, with up to 20.000-25000 people to have been employed therein in the next 5 years. Imagine what 25.000 new jobs would mean to Samegrelo province. Besides, many others from the neighboring Abkhazia’s Gali and other regions would have been employed, too.

The Anaklia port would have made a direct GDP contribution. For instance, the share of the Dubai port and Free Economic Zone makes up 25% of the whole economy as against 7% of the oil. The port of this scale would have made it possible to receive 70% of the ships sailing in the Black Sea. Imagine, you’ve got a parking lot for a 4- person car but you can have the one big enough for a 40 passenger bus. It would have been nothing short of an economic boom. Therefore, it is a project of strategic importance since Georgia is the only country on the Black Sea coast, with no deepwater port. Moreover, Georgia is a party to the free trade contracts with the EU, CIS, Turkey and Hong-Kong. Let’s say a telephone case is manufactured here, as well as China. Quite possible, isn’t it? It means that you enter the EU market with a totally different tax regime and employ a number of people locally. A large number of Japanese companies are now pulling out of China. Why did Japan fund the project? It was not merely about the financial support: they show keen interest to the transfer of their companies to Georgia. Japan does not transfer labor. They take the engineering systems, hi-tech; they first train people and afterwards start a business. It is the vision which is going to contribute a lot to the country”, - Mr. Mamuka Khazaradze states.

In general, the Anaklia deepwater port project involves three related key directions: economic development, security and foreign policy. Those are so tightly intertwined that it’s hardly possible to separate them. What difference would it make if Georgia secured its international strategic significance by its projects and industrial development? What would creation of the port-related jobs have brought about? What significance the port would have had in terms of security? And finally, would it have highlighted another step towards integration with the West?

The investment in phase I of the Port in Anaklia made up 600 M USD to have eventually hiked up to 2.5 bn USD. According to the plan, in the final phase the port was to have employed up to 20 000 people.

By 2020, there should have been a container terminal of 1 million carrying capacity TEU containers per year to have finally reached 100 million tons.

In 50 years, the Anaklia port project would have created 60 bn USD economic value.

What does it all mean in general terms and namely for a small country like George to which direct foreign investments are vitally important?

Speaking about the economic aspect of the project, Mr. Gia Khukhashvili, expert remarks that it is a multidimensional, beneficial scheme to be considered in a broad context.

But given the fact that the port in Anaklia was going to be not only a deep water one allowing servicing big vessels, but it would have made it possible to create a logistical hub of its own production cycle, it may have been used not only for shipment purposes but may have created an economic zone, a kind of East-West link with its industrial component. It’s a fairly attractive project which would have made it easier to enter markets and eventually integrate with the West. All in all, if implemented, the Anaklia project would have acquired a significant economic and geopolitical meaning adding up to Georgia’s importance of a country on the crossroads between the West and the East.

Also, the complex developments in the Black Sea basin are to be taken into account. Russia’s domination creates problems in terms of NATO: the three NATO member states along the Black Sea coast are virtually unprotected against the potential threats. NATO or the Western states do not have the relevant infrastructure in the Black Sea to balance Russia’s domination. Meanwhile, the Anaklia port may have acquired this function. Given the aforesaid, it appears as a strategically important element where the Georgian economy, security system and policies are concerned,” – expert Khukhashvili says. “As to mentioning the Anaklia port project in the Constitution, it is the strongest guarantee securing an investor from the risks. Unfortunately, with us political interest of bringing something to nothing overweighs the Constitution and that’s what we are witnessing now. To those who dumped the Anaklia project, the Constitution is but a scrap of paper...” – Mr. Khukhashvili says.

The Deep and Comprehensive Free Trade Agreement between the EU and Georgia, Moldova and Ukraine is worth mentioning as well. DCFTA, a part of Georgia- EU Association Treaty involves the economic integration mechanism making the EU market accessible to Georgia.

Not only does DCFTA imply liberalized trade in goods and services but it also involves a broad range of issues, such as the food safety, competition policy, protection of intellectual property, financial service etc. and envisages gradual harmonization of the Georgian legislation with that of the EU. By and by, owing to DCFTA Georgia may enjoy three out of four liberties of the EU internal market: free movement of goods, services and capital. As to the fourth – freedom of movement of people, it is secured by the visa free regime.

Georgia ratified the Agreement in July 2016 during Premiership of Mr. Giorgi Kvirikashvili.

In the EU – Georgia negotiations over DCFTA, liberalization of tariffs was a remarkable achievement: on condition of meeting certain standards (food safety), all the Georgian products (garlic within the quota) enter the EU market duty free.

What does it mean in terms of the Anaklia port? In Mr. Khukhashvili’s words: “since many Asian countries are not fully competitive at the EU market limited by quotas, the bilateral relations are not full-fledged. The advantages granted to Georgia under DCFTA may have been used to rouse the interest of the Chinese, Indian etc. companies seeking to boost their production capacities in the free economic zones, among which Anaklia looks the most promising. It means that if a product is produced here, 60% or, in some cases 40% or 50% of its production costs may be attributed to Georgia, which could serve as an incentive to the Asian investors to establish small enterprises in Anaklia. Anaklia would have helped them in terms of the market development. The employment rates would have improved, too,” – Mr. Khukhashvili says.

“After the construction of a new sea port in Anaklia, Georgia will become a major link between Eurasia and Europe. The economic interdependence will strengthen Georgia’s security and create a balance in the Black Sea region. Further expansion of NATO is unquestionable. We are obliged to expand,” -Lieutenant General Ben Hodges, former Commander-in-Chief of the US Army in Europe said.

Considering the Anaklia port in the security context, Ms. Khatuna Lagazidze, expert refers to General Hodges’s statements, saying that if constructed, the port in Anaklia would have boosted Georgia’s international stance.

Security is not limited to building the defense potential. A country can get the security guarantees due to its part and function in the international affairs. In this context, the international oil and gas pipeline projects of 1990’s and 2000’s involving Georgia are a good example. Those made it possible to ship energy resources via Georgia, Azerbaijan and Turkey bypassing Russia. It was exactly this function that kindled the West’s interest to Georgia due to which the security of the country became important to NATO and the US. This function has created a kind of a security belt. That’s what Anaklia should have become in the second and subsequent decades of 21 century. It is its core meaning, let alone the economic component. Look at the developments in the region, the new reality emerging after the developments in Karabakh. Just a few weeks ago, we saw President Aliev standing by the NATO Secretary General and speaking about the new transportation and communication corridors between the Gulf and the Black Sea. Can you imagine how important the Anaklia port would have been to this country? When you are the key component of the infrastructure, your security is vital to all the countries involved in the motorway etc. communications. We have lost it all.

That’s what Russia was after. Our neighbors have proved to be more forward looking. That’s why Moscow foiled the Anaklia port scheme. Looking back, I remember General Ben Hodges saying that Anaklia may become the port servicing the NATO warships. Georgia is not a NATO member. He can’t have mentioned establishment of the NATO bases in Georgia. However, its function would have become much more significant; the port would have been servicing large tonnage vessels,” – expert Lagazidze says emphatically.

It was during Trump’s presidency that the then Georgian PM Mr. Mamuka Bakhtadze met Secretary of State Mike Pompeo, who emphasized importance of the Anaklia port to Georgia and Washington’s desire to see it become a reality. It is just another indication that to the US, the port was an argument in its efforts to highlight Georgia’ significance. It would have been strong vindication as to why the West sought to protect Georgia. Today, Moscow’s ultimatum of non-admission of Ukraine and Georgia to NATO makes it all clear enough, -Mrs. Lagazidze says.

At present, the prospects of the Anaklia port project are unclear. In 2020, the West’s initial reaction to its indefinite suspension was strong enough. Mr. Giorgi Gobronidze, international affairs analyst suggests that implementation of this scope project would have been a good way to dispel some of the EU members’ doubts about what Georgia could contribute to the Union and not vice versa.

For instance, receiving and forwarding cargo from the East to the West and vice versa, becoming a transportation hub is Turkey’s foreign policy priority. In this sense, we too could have played our part. In the geopolitical and economic terms the Anaklia port project was no less important to Georgia than the Baku – Ceyhan pipeline of the 1990’s. It would have boosted the country’s economic and international position. If we consider our national and strategic interests vital, we definitely need the deepwater infrastructure. It’s as clear as that.

More countries carrying out East-West cargo shipment would be seeking to forge economic ties with Georgia. On the other hand, it’d have strengthened our security. The more a country is of an economic interest to the others, the more it is viewed as a stable partner, the smaller a chance of its finding itself in political or economic isolation. The Anaklia port would have made our international positioning much stronger, make it more attractive to the EU and the European economic zone. The recurrent question is: Georgia is going to benefit from the EU membership but what the other way round: what about the EU? Some kind of skepticism we are witnessing is caused not only by the political situation at home and the level of democracy here but by the fact that some European states do not see us as an interesting partner. If we offer the European market and, in broader terms, the European economic area something that may increase its penetration to the Asian markets and simplify the common European logistics, our position will become stronger and Georgia will become more interesting as a negotiating partner.

As to the risks, for instance, Russia’s concern about the NATO expansion, the Anaklia project would have been helpful in this regard as well, for not only would it make the country an interesting partner to the West but portray Georgia as a bridge rather than a lame duck. The problem is that we publicly pledged to our partners that the project they had invested in would not stop but eventually it did. It’s detrimental to the bilateral relations. If there were risks, we should have told them frankly. If the partners show such a keen interest, we should ask: “would you stand by in case of a threat? In case of the Anaklia project, the threat was immeasurably smaller, than the one facing us in the construction of Baku- Tbilisi-Ceyhan pipeline,-Mr. Gobronidze claims.

Why didn’t the Government support the project? Due to its vicinity to the breakaway Abkhazia, would the port in Anaklia have made a difference?

Responding to the questions Mr. Gobronidze says: „The Government took a very ambiguous stance towards the project. A parliamentary budget and finance committee official’s pronouncements in this regard, namely that the Russian threat could be neutralized, made one suggest that the Government wanted to suspend the project for a while or else to be implemented differently.

Meanwhile, it's important to take other business interests into account as well, meaning that if Anaklia operated at full capacity, fewer vessels would be entering the Poti port and the cargo turnover in the other Georgian ports in Poti and Batumi would dwindle. The Poti port has the biggest share of the national sea trade. The question is: whose economic interests would intersect? As far as I know, there are some people close to the Government there and, also, the Russians have invested in the Poti port, as well. We can suppose that Russia was interested in dumping the Anaklia project not only for the geopolitical reasons but business, too. Apart from this, some groups close to the Government also showed, as they still do, interest in the Poti port.

Consequently, we can presume that the ruling circles had sufficient grounds for either dragging out or suspending the project. The fact is that the interest in the Poti Port outweighs the one in Anaklia.

As to the relations between Georgia and the breakaway Abkhazia, the port in Anaklia could have marked a breakthrough. What I have in my mind is the living standards in this country. There shouldn’t be 1.600.000 labor migrants from Georgia, with up to 700. 000 households looking at their family members or relatives abroad for support. Remittances from abroad nearly equal direct foreign investments. Once again where the economic situation is concerned, the project would have been no less beneficial to the economic activity in the country.

We all know it only too well that neither Georgians, nor Abkhazians or Ossetians think of an independent country they live in first thing in the morning. They all have plenty of things to worry about. What prospects do we show to a large number of our people, whose biggest concern is just to tackle their hardship? If we want to have any influence over the people in the breakaway regions, make them more interested in living in a single country as we used to, our living standards should be much higher not the way things are now: 65% of the people are poor. Our economy has to be attractive and the port in Anaklia would have been a very important infrastructural unit. The same is true for power plants, the road construction, healthcare, educational projects etc., -Mr. Gobronidze remarks.

For centuries Georgia’s geographic situation has caused it plenty of trouble. However, with clever maneuvering we can turn the same geography to our advantage. Even our Western partners have often pointed out at Georgia’s strategically convenient situation and what big opportunities turning it into the Asia-Europe bridge holds out.

It is exactly the initiatives like the Anaklia deepwater seaport project that create opportunities for they have the potential of becoming a lynchpin to the much more robust powers surrounding them. Also, they can become a part of larger-scale regional and global projects and at the end of the day, drive the national foreign policy and economy.

“Belt and Road Initiative” or “One belt, one road” initiative, China’s major foreign policy strategy involves two large-scale projects: the economic belt along the Silk Road route and the 21 century maritime Silk Road.

The One Belt, One Road routes run from the western provinces of China to the economic centers in Europe and South Asia. The “belt” embraces 4.4 bn people living in the inland and coastal areas of over 60 countries. It also covers 30% of the global economy (6 trillion USD) and 23.9% of the world export.

The people behind the Anaklia port project believed that it was poised to become a significant component of the global project, a strategic point along the route.