Implementing the BRI in a Fragile Region: China in the South Caucasus

Nowadays the region of South Caucasus still maintains its strategic relevance, which intensifies the interest of great powers towards it. In recent years, besides traditional regional actors (Russia, Iran and Turkey) analysts have noted an increase in China’s interest towards South Caucasus – mainly, in the context of the Belt and Road Initiative (BRI). One of the key projects of Chinese policy in the region is the Trans-Caspian International Transport Corridor (TCITC), which is supposed to connect China and European countries in a new way – via Kazakhstan, Azerbaijan, Georgia and Turkey. This route is also called Middle corridor. It is supposed to cut by three times the delivery of goods from China to Europe.

Tbilisi, Georgia. Photo by Igbal Abilov.

All three regional states are interested in developing and strengthening political and economical ties with China. On May 14-16, Nikol Pashinyan made an official visit to China, where he met with Xi Jinping. As a result, the Armenian Parliament has already ratified the agreement on the mutual lifting of visa requirements for both countries’ citizens. On April 24, Ilham Aliyev met with the President of the People’s Republic of China during the second forum of international cooperation “One Belt, One Way”. On May 24, the visit of Minister of Foreign Affairs of China Wang Yi to Georgia took place. Azerbaijan and Armenia are dialogue partners of the Shanghai Cooperation Organization.

Lahij vil., Ismailli district (rayon), Azerbaijan. Photo by Igbal Abilov.

South Caucasian countries are taking various steps to create the necessary infrastructure to increase both cargo traffic and investments from China. In 2017, the Baku-Tbilisi-Kars railway was opened through the territory of two states of the region – Georgia and Azerbaijan. In 2018, the Alat port was opened near Baku, Azerbaijan. It is also planned to increase the capacity of the Baku Sea Port itself. Georgia already has 4 active ports and there is an ongoing construction started in 2017 – the first deepwater port (Anaklia). Armenia remains cut off from these infrastructure projects.

The trade turnover between China and South Caucasian states has also grown heavily in recent years: with Azerbaijan – from $52.3 million in 2002 to $654,9 million in 2013 and almost $1.3 billion in 2017, with Georgia – from $1.2 million in 2002 to $645,4 million in 2013 and more than $935 million in 2017, and with Armenia – from $14.2 million in 2002 to $454,7 million in 2013 and more than $596,2 million in 2017.

Signed in 2017 Free Trade Agreement between Georgia and China has entered into force on January 2018, making Georgia the only post-Soviet and Caucasian country having free trade deals with both the EU and China.

Moreover, China has invested in number of projects in Georgia, including automobile factory in Kutaisi, and Azerbaijan, including the biggest cement factory of the country. In 2016, Asian Infrastructure Investment Bank provided its largest loan ($600 million) to TANAP pipeline project.

Despite the glittering future of economical cooperation, there are serious obstacles to the deeper embrace between China and three South Caucasian states. First, the market of three states is very small and does not represent much interest for Beijing. The South Caucasus is interesting to China primarily as a corridor for entering the European market. On the other hand, it is obvious that considerable odds in trade turnover figures are in China’s favor. Secondly, China declares BRI as a project that unites countries and removes contradictions between them. Overcoming the contradictions is a key point for the realization of transport opportunities of Middle corridor. But the South Caucasus is a heterogeneous region divided both by foreign policy (Armenia is a member of the CSTO and the EAEU, Georgia aims for NATO and the EU, Azerbaijan is trying to maneuver between two blocs), and along religious and ethnic borders. There are still several hotbeds of military conflicts in the region (Nagorno-Karabakh, Abkhazia, and South Ossetia). China is not ready to invest significant foreign policy efforts to resolve them. Even if it was ready to offer radically new models to resolving these conflicts and to cooperation between conflicting parties, it would have to face the interests of traditional regional actors (Russia, Turkey and Iran), who have their own ambitions in the South Caucasus. Additionally, these conflicts (their possible renewal) are a threat to the security of possible investments in the region.

Contrary to the expectations of last decades Southern Caucasus remains low-priority region for China with no wide scope of interaction.

Written by:

Igbal Abilov (Department of International Relations, Belarusian State University)

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