China’s Belt and Road Initiative and Georgia

Georgia has historically been at the edge of empires. This has been both an asset and a hindrance to the development of the country. An asset because Georgia’s difficult geography and distant location from global centers, denied major powers to invade and keep the country under one’s rule. A hindrance because its geography requires major investments to override its mountains, gorges, rivers etc.

This geographic paradigm has been well underway in shaping Georgia’s geopolitical position since the breakup of the Soviet Union in 1991. Ever since Georgia has been playing a rebalancing game through turning to other regional powers to counteract the resurgent Russia. Turkey, Azerbaijan, Iran and bigger players such as the EU and the US have their own share of interest in the South Caucasus. However, over the past several years yet another power – China, with its still-evolving Belt and Road Initiative (BRI) – has been slowly gaining strength in South Caucasus. But despite the fact that China is rapidly increasing its economic presence in Georgia, which ultimately could turn into bigger Chinese security involvement, Beijing’s investment and interests in the region still lags behind what China has been doing in Central Asia, Pakistan or indeed other parts the BRI is encompassing. Another interesting aspect to Chinese influence is Georgia’s balancing act, whereby Tbilisi wants to use growing Chinese influence to further balance Moscow’s military power. However, this is also not as simple as it sounds, as Moscow and Beijing could potentially cooperate in the South Caucasus as they currently do in other regions, for example Central Asia.

China has close trade contacts with all South Caucasus countries, and has invested extensively in the region. Among those relationships, Georgian-Chinese cooperation does indeed stand out, but this is not a particularly recent development. After the collapse of the Soviet Union, Chinese immigrants in Georgia were driven by Chinese state-owned investment activities in the region. In the early 2000s, the majority of the migrants were involved in corner shop and market vendor businesses, as well as restaurant businesses, whereas after 2010, construction workers became the main employment of Chinese migrants.

For Georgia, China is now its third-largest trade partner (After Turkey, Azerbaijan and Russia). Trade between the two countries significantly increased over the past ten years. In 2002, bilateral trade was roughly 10 million USD, in 2014-2015 it reached 823 million USD. In 2017, China and Georgia finally signed the free trade agreement during a visit of the Georgian delegation to China in May. The country also hopes that its position in the Black Sea’s ports, such as Batumi, Poti and Anaklia will make it a logistics hub for the entire region, and particularly for China’s BRI initiative.

Within the BRI context

China only recently set its sight on the South Caucasus’ transit potential and valuable infrastructure. This interest is largely conditioned by China’s Belt and Road (BR) initiative, which is a multi-billion-dollar project, according to which the country’s east will be reconnected (as in ancient times) to Europe, through the shortest distance, whether through southern Russian, Central Asia, or the South Caucasus and the Black Sea (although that is not the only corridor the Chinese are working on).

As mentioned above, Georgia can boast of its Black Sea ports, east-west highway, which essentially connects Azerbaijan and the Black Sea coast, and the existing and upcoming railway projects (Baku-Tbilisi-Kars). Indeed, from a Chinese perspective, the two most valuable projects Beijing is eyeing up in the South Caucasus are related to Georgia: 1) The upcoming opening of the Baku-Tbilisi-Kars railroad which will allow a 45% faster delivery of containers, reight and passengers from Asia to Europe; 2) Expanding the East-West Highway, Georgia’s main land road transport, in cooperation with the World Bank, the Asian Development Bank, and other organizations.

China has been testing the South Caucasus route since the announcement of the belt and Road initiative in 2013. For example, in 2015, the connection efficacy between the Xinjiang province of China to the port of Poti in Georgia, via Kazakhstan and Azerbaijan, was tested. Railway cargo loaded in China on 29th of January arrived in Georgia on 6th of February of the same year. However, almost a third of the time in transit was spent handling administrative obstacles. Several other tests, too, were carried out to prove the possibility of the trade and transit route through the South Caucasus.

However, despite those advantages, for Georgia as a transit country, there are still numerous questions. It could be said that overall China still remains ambivalent about the Caucasian stretch of the Silk Road. True, that Beijing is interested in the strategic relevance of the region, but it nevertheless recognizes that commercial engagement remains tentative. The South Caucasus route still remains out of major transit and trade routes China is heavily investing in.

Analysts do forget that the South Caucasus route does not feature much in the following corridors anticipated under the BRI initiative:

1. China to Europe through New Eurasian Land Bridge;

2. China-Mongolia-Russian Corridor;

3. Central and West Asian countries.

The 21st Century Maritime Silk Road mainly relies on Chinese coastal ports:

4. China-Indochina Peninsula Corridor will link China with the South Pacific Ocean through the South China Sea;

5. China-Pakistan trade corridor;

6. Bangladesh-China-India-Myanmar trade route.

Compared to major Chinese-financed infrastructure and energy works completed in Russia, Kazakhstan, and Uzbekistan in the past two years, state-owned Chinese companies have yet to secure any similar scale projects in the Caucasus region. Indeed, the Chinese are building major road and railway infrastructure in Uzbekistan and are extensively investing in Kazakhstan and Kyrgyzstan. In Georgia, for the moment, Beijing is largely interested in the existing and upcoming infrastructure, and is investing in construction in Tbilisi, Kutaisi and other major cities.

Possible Wider Geopolitical Ramifications for Georgia

Tbilisi sees intensive relations with China as yet another tool to somehow diminish Russian resurgence. With its pro-western course maintained, the country desperately needs Chinese investment, as its will foster the creation of jobs and other economic opportunities. So far, the Chinese have built a new district on the outskirts of Tbilisi, have invested in Kutaisi – the second-largest city in the country, and own ¾ of shares of Poti’s free industrial zone. Although it is difficult to see the importance of investments in Tbilisi and Kutaisi, Poti’s investment is a significant one. An ordinary observer could see a clear east-west line to the Black Sea spotted with Chinese presence. Surely it is for the moment difficult to ascertain what the Chinese moves will be in the future, but it is also clear that as the Russian forces move the demarcation line of the breakaway South Ossetia to the south, closer to the east-west highway, China will be more worried as it endangers its economic interconnection with Europe. Beijing will either have to find a consensus with Russia or get more involved security-wise. And there is already a precedent for China becoming involved militarily in the territories important to its BR project. For example, in Central Asia, China has made some steps which potentially could challenge Russia's economic and political influence in the region. We know that China is already the largest trade partner of each of the Central Asian states, and that Beijing has deepened its military and security ties with Tajikistan and to a certain extent with Kyrgyzstan, mainly by holding military exercises and building military infrastructure on the Tajik-Afghan border.

For Tbilisi, it will be a boon to its security if China is more involved in the South Caucasus. However, it may just be wishful thinking to think that China will openly confront Russia anytime soon. Even in Central Asia, despite inroads, Moscow still does not say openly that Beijing is compromising the existing order.

Another reason to think that Georgia will not so easily become a land for confrontation between China and Russia is the fact that the country is only a small part in China's BR. Also, although Beijing will pay more attention to the region, it may not actively invest resources into Georgian security beyond law enforcement and counterterrorism cooperation, as in Tajikistan and Kyrgyzstan. This would be the case especially if its actions would clash with Russia's. There are several other transit routes, too, in China’s BRI grand project.

In conclusion, the situation for the moment could be characterized as mixed. Beijing is definitely increasing its economic influence in Georgia. However, the investments are not on a par with Chinese actions in Central Asia or Pakistan. Beijing is rather interested in the existing and upcoming infrastructure, while its relations with Russia are unlikely to be compromised if Russia does not threaten the major East-West highway.