Azerbaijan's neighbors estimate economic consequences of peace in Karabakh

Because of the 30-year-old hostility between Azerbaijan and Armenia, the main transport and energy communications from Baku to Europe ran through Georgia, although the Armenian route to Turkey and from there to Europe is shorter and more profitable. Azerbaijan is also connected by pipelines and transport links with Russia and Iran, but the monetary value of goods transported through these communications is less.

For 30 years, Georgia has benefited from Azerbaijani traffic. After on November 9, 2020, Putin, Aliyev and Pashinyan signed a Statement with its ninth paragraph, in which they confirmed their intention to revive the Soviet railway line from Baku through Armenia to Nakhchivan (further the route to Turkey opens), experts are calculating the impending losses of Georgia.

"Because of the agreements between Russia, Armenia and Azerbaijan, Georgia is afraid of becoming useless," says the Russian newspaper Kommersant.

The Asian Development Bank, together with the European Bank for Reconstruction and Development, allocated about $ 500 million to Georgia for the reconstruction of the Caucasian highway, taking into account its importance for Armenia. Now the future of this project is uncertain. The reason is the agreement on "unblocking all economic and transport links in the region" reached in Moscow on January 11 by Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev with the mediation of Russian President Vladimir Putin.

The third president of the country, Mikhail Saakashvili, announced the "catastrophic consequences" of the project for the transit significance of Georgia speaking on the air of the opposition television company "Mtavari Archi" ("Main channel"). “Azerbaijan needed us for communication with Turkey and Armenia for communication with Russia,” the politician explained, showing the routes on the map live. He especially noted that the only highway from Armenia to the Russian Federation passed was through Georgia, and added, "Moreover, Armenia hoped to open a railway connection with Russia through Abkhazia."

Now, as the ex-president notes, Georgia can turn into an "amputated part of the South Caucasus" that "no one needs". “Putin brought Aliyev and Pashinyan to Moscow and told them, “Why do you need Georgia?” the former Georgian leader offered his version of events.

Tornike Sharashenidze, a professor at the Institute for Public Research of Georgia, believes that the time of financial losses for his country will not come soon, since it takes time to build a road through the Armenian Meghri, and when the road starts working Azerbaijani cargoes in Armenia will be checked and therefore delayed.

Cargoes from Yerevan will be transported to Russia by the Azerbaijani railway via Baku. Sharashenizde believes that “with the new Armenian-Russian corridor it will be even more difficult. Firstly, a railway line running from Yerevan is being reconstructed here, which actually no longer exists; and trains going from Armenia to Russia (and vice versa) must pass through a rather large territory of Azerbaijan.

If we assume that security is not an issue, the movement of the trains is likely to slow down: the route is long and includes three countries,  as well as Azerbaijan, which is hostile to Armenia and which will also detain Armenian trains at its border. Considering all this, the easier way for Armenia to enter Russia may be through Georgia” (JamNews).

The professor considers states that the talks about laying new oil and gas pipelines from Baku through Armenia are unfounded. “The construction of the pipeline requires huge costs and it is not clear why Baku and Ankara should bear these costs when the Azerbaijani-Georgian-Turkish pipelines have been working without problems for a long time. In addition, this time Azerbaijan will have to go to Turkey through another country. This country will be Armenia. In short, it is not worth discussing seriously.”

In any case, Sharashenidze considers it important for Georgia to increase the attractiveness of its transit opportunities so as not to lose the benefit from freight traffic.

Stanislav Tarasov, an analyst with the Moscow edition of Regnum, writes about the political consequences of redirecting cargo from the Georgian route to the Armenian one: "Georgia will soon have to abandon playing the European and American cards in Transcaucasia, which previously seemed trump cards, and begin to build a balanced foreign policy."

The Prime Minister of Armenia promises the people to improve economic performance thanks to the Peace Declaration he signed, but his opponents think otherwise.

Economist Hrant Mikaelyan believes that there is no reason to expect any economic benefit from the opening of communications:

“This is beneficial only for Azerbaijan. It is enough to look at the map of the railway project to understand that Armenia does not have such prospects. Firstly, the railway route to the Russian border through Azerbaijan is about 2.3 times longer than the road through Georgia.

Secondly, if Azerbaijan retains sovereignty over the road passing through its territory, then the corridor through the territory of Armenia is extraterritorial. Azerbaijan can close its corridor at any moment, but not Armenia” (Jam News).