The first rail connection between Turkey and Georgia is fast approaching completion. When operational, the Baku-Tbilisi-Kars (BTK) line, which extends to Azerbaijan, could integrate all three countries to unlock new trade patterns and shift Eurasia’s economic center of gravity inward. The potential gains are significant, but so are the obstacles in laying the Middle Corridor of the New Silk Road.
Some of those obstacles have surfaced over the past ten years of construction. With the inauguration date set originally for 2010, the project has been repeatedly delayed due to a plethora of funding issues, difficult terrain, and changing governments. Of the three presidents to initially announce the rail connection in 2007, only Ilham Aliyev of Azerbaijan survives ten years on, with new governments and fresh personnel changing the political landscape of Turkey and Georgia.
Political turnover has not dimmed excitement from top officials. Mikheil Saakashvili, former President of Georgia, has called the development a “geopolitical revolution.” Turkish Prime Minister Binali Yildirim called it “an essential part of the historical Silk Road.” Aliyev has promised it will create “thousands of new jobs in Azerbaijan and neighboring countries.” All three envision integration as a prelude to the South Caucasus bridging the economic powerhouses on either end of the Eurasian landmass.
The economic potential is evident. With the BTK operational, national cargo transportation is expected to more than double in all three countries by 2034. A range of goods could benefit, including electronics, metals, coal, machinery, petroleum products, and perishable agricultural goods, the latter benefitting from a significant reduction in transportation times over maritime alternatives. In anticipation of increasing passenger flows across the three countries, Azerbaijan Railways ordered 30 double-decker sleeper carriages from a Swiss firm.
The railway also stands to benefit from several developments of regional initiatives. Under the Trans-Caspian Trade and Transit Corridor, the ports of Aktau, (Kazakhstan), Anaklia (Georgia) and the new Baku International Sea Port at Alyat (Azerbaijan), are developing in anticipation of increasing trade. To the East, cargo trade across the Caspian increased by 164 percent from 2016 to 2017 alone, while the Marmaray project in Turkey to the west created the first standard gauge rail connection between Europe and Asia across the Bosphorus. Synchronization is crucial, as these projects could succeed or fail together. As one transport official from Azerbaijan emphasized at the recent Trans-Caspian Forum in Washington DC, “without BTK, the Baku International Sea Trade Port at Alyat is not relevant.”
Much of the excitement has centered on cutting into trade flows between the industrial growth of East Asia and the economic powerhouses in Europe. Trade stands at €1 billion per day between Europe and China alone. Approximately 90 percent of this trade is transported by sea through congested straits, taking 30-45 days, which could be reduced to 10-15 days by rail. Just short of the EU, bilateral trade between Turkey and China in 2016 is valued at $27.76 billion in overall volume, with Turkey importing more from China than any other nation.
In this wider framework, geopolitical realities enhance the BTK’s appeal for East-West trade. To the North and South, political and financial risks loom large. With the relative reintegration of Iran into regional transport initiatives, increasing trade south of the Caucasus, alternative routes could bypass Georgia and Azerbaijan entirely by directing flows over the Turkish-Iranian border. The route has become problematic for transit cargo and passengers, however, with lengthy delays at border crossings and explosions on train tracks.
To the North, Russia’s tensions with the EU have narrowed transit primarily through Belarus and the Baltic States, bypassing the path through Ukraine into the heart of Europe. Additionally, food import bans and other Russian market restrictions have reoriented priorities for cross-continental trade. These dynamics all enhance the BTK’s viability.
Ultimately, the success of the BTK rests on the coordination, political stability, and soft infrastructure between all three countries involved at the heart of the railway. At the center of the connection, Georgia is 16th in the global Ease of Doing Business rankings, with free trade zones across Azerbaijan (Alyat), Georgia (Hualing Kutaisi FTZ and Poti), alongside industrial and logistic centers in Turkey (near Kars), providing favorable conditions for investment. But with Georgia and Azerbaijan’s logistics performances ranked 130th and 124th, respectively, there is room for improvement.
Coordination will be key. All three state-owned railways need effective strategies in pricing, timing, and reliability, to mitigate bottlenecks and make this corridor competitive. While construction presented its own difficulties, the challenging task of modernization, and harmonization of pricing and logistical efficiency will ultimately decide whether the BTK flourishes.
Alexander Sekhniashvili is a researcher for the Reconnecting Asia project at the Center for Strategic and International Studies. He earned his master’s degree in Russian and East European Studies from the University of Oxford.