Mediation needed to save Georgia’s #Anaklia port opportunity

A consortium planning to build a major port on Georgia’s Black Sea coast has been given until the end of the year to secure financing for the project, writes Martin Banks.

The deadline was announced by Georgia’s Regional Development and Infrastructure Minister Maia Tskitishvili.

It extends a deadline originally set for earlier this week.

Anaklia Development Consortium (ADC), which signed a deal in 2016 to build the $2.5 billion port in Anaklia over nine phases, has accused the Georgian government of sabotaging the project by rejecting the investors ADC had presented before the initial October 15 deadline.

The deadline extension is being viewed in Tbilisi as the Georgian government attempting to avoid a likely lawsuit in Geneva over their obstruction of the port project, although some stakeholders are more optimistic that the government’s change in attitude might signal a genuine attempt to finally support the project.

 Levan Akhvlediani, the consortium’s director general, welcomed the extension and stressed that public and private parties needed to work together to successfully implement the project. The government had given ADC until October 15 to replace its partner Conti International, the U.S. firm that withdrew in August.

But ADC said on Tuesday (15 October) that the government had rejected proposals for two new foreign investors. In total, five investors withdrew their interest due to negative statements made by the government during both formal and informal meetings with stakeholders in the project.

On Thursday (17 October), Akhvlediani said: “It is necessary that both sides sit down at the negotiating table now and resolve all issues for the successful implementation of this project.  The consortium cannot solve these problems alone without the support of the government.”

Anaklia’s deep water port aims to deliver Georgia the status of a key trade hub between Europe and Asia.  The first phase of the port was set to be fully operational by December 2020 with a handling capacity of up to 10,000 vessels. It would be the largest infrastructure investment in Georgian history. Russia is thought to be against the project, fearing it will have a negative impact on Novorossiysk port in the Black Sea and undermine Russian influence over regional transportation. Western diplomats in Georgia have always been in favour of the Anaklia port development, urging Georgia to seize the opportunity to boost the Georgian economy and play a crucial role in trade.

ADC has met with government refusal to cooperate with the consortium and to engage constructively with US, European and other investors who have wanted to fund the project. Conti Group, a major US investor, pulled out of the project in August, saying that the Georgian government has lost interest in the port’s construction.

There has been a great deal of speculation among the diplomatic community in Tbilisi that the Georgian government has been opposed to the development because it did not conform with their pro-Russian agenda and because of Bidzina Ivanishvili, chairman of the ruling party, feared the project would give further influence to Mamuka Khazaradze, an advocate of the port project and the founder of the new Lelo political movement that is gaining momentum in Georgia. Khazaradze has since distanced himself from the port project in an attempt to save it.

The strategic economic and security importance of Anaklia is clear, not only for Georgia but for the wider Caucasus and Central Asian regions and for Georgia’s western partners. The US and EU support for the project has been strong and consistent. The potential development impact of this project for Georgia will be significant, with thousands of high-skilled jobs likely to be generated and a boost to the Georgian economy. 

Elisabeth Rood, U.S. Chargé d´Affaires in Georgia, said: “The US continues to believe that the Anaklia port project is a very important project for Georgia’s economic development and for the fulfilment of its potential as a trade and transportation hub. We continue to believe that this project should be completed with American investment because this can be a very strong strategic partnership between the US and Georgia in the economic sphere.”

The EU gave an upbeat reaction to the deadline extension with EU ambassador to Georgia Carl Hartzell stating: “We hear positive attitude and readiness for implementation of the project from all sides, therefore I think that the importance of Anaklia Port is obvious for everyone.”

Europe and the US will be watching with great interest to see if the Georgian government’s extension of the deadline also includes a willingness to play their part in working positively with the consortium to make the port a reality.

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