Anaklia Port: the Window to Georgia

Anaklia exemplifies what Georgia strives to be. There is no doubt that it is a game-changing project that can alter our perception of political geography, unlocking markets and disrupting trade flows from Europe to Asia as we know them. On the eastern shores of the Black Sea, infrastructural “hardware” combines with regulatory “software” which Georgia has been building for over a generation to deliver the “next big thing” in international trade.

Changing landscapes

There are at least two ways to see Anaklia. On the one hand, it is a gateway to a 160-million person market in the landlocked states of Central Asia; on the other hand, Anaklia is a trade hub in the emerging trade route from China to Europe – and vice-versa – through Central Asia. The role Anaklia can play is not “destiny,” but the materialisation of vision.

There is an old Norwegian proverb that goes “the sea unites us, land divides us.” This saying refers to the difficulty of overland travel throughout history. For over five centuries, the link between the Far East and Europe has been almost exclusively shipping. Ever since the Portuguese reached China with their caravels in 1513, global trade has shifted to the Atlantic, with sea travel becoming faster, safer, and more cost-effective. In this case, caravels made the difference. Today, bullet trains are the equivalent of Portuguese caravels, breathing new life into ancient caravanserais and overland trade routes.

East of Georgia, the Silk Road is regaining significance as trains run from China through Kazakhstan, Iran, Azerbaijan, and Georgia. Then, cargo can be redirected to Turkey, Southeastern Europe and the Middle East. Alternatively, it can be shipped to Central Europe. For landlocked Central Asian nations with a total population of 160 million people, Anaklia is the natural import-export logistics centre. For mainland China, Anaklia is the diving board before one takes a dip into the lucrative Single Market of 500 million people, which embraces Turkey.

Despite a population of only 3.8 million people, Georgia’s geographical position makes its ports indispensable to regional logistics. Georgia’s seaborne container demand has increased rapidly in recent years, with the rapidly growing countries in its hinterland market, outpacing infrastructural capacity, increases. Anaklia opens new horizons.

Across the western side of the Black Sea, logistics experts can look to Odessa, Constanta, Varna and Burgas. But, on the eastern shore of the Black Sea, only Anaklia can host Panamax type vessels. Through Anaklia, Eastern Europe can reclaim its own centrality in ancient trade routes, unlocking markets and unleashing the potential for production and exports into the heartland of emerging economies. From Madrid to Xinjiang, cargo today can reach its destination in less than 12 days; from Warsaw, it takes a week.

Anaklia trims the cost and narrows the distance between Europe and Asia. It is not a stop. It is not “in the middle” of a trade route. Anaklia is an infrastructure that adds value and interlinks different regions of the world, markets, people, and ideas in ways previously impossible. This is what Georgia wishes to do; this is what Georgia wants to be, and this is the landscape it is creating.

An attractive manufacturing proposition

Adjacent to the port, the Free Industrial Zone (FIZ) of Anaklia opens up new possibilities.

For years, Georgia has honed one of the most attractive business environments in the world. With signing and implementing its Deep and Comprehensive Free Trade Agreement with the EU, which comes hand-in-hand with the highest international regulatory trade standards, Georgia is moving to conclude a Free Trade Agreement with China. And Georgia has already concluded preferential trade agreements with EFTA, Japan, the US, and Canada. From Georgia, producers and exporters have special access to the biggest markets in the world, as well as and favorable terms.

Besides the special corporate tax status of an FIZ, investors in Georgia have access to a cluster of goods and services in one of the easiest places to do business in the world. This includes a low-regulation and low-taxation environment, with European levels of transparency and internationally competitive labour and energy supply costs. Georgia not only makes up part of an oil and gas energy highway from the Caspian region, but also has a state of the art electricity grid and covers 95% of its electricity needs from clean, reliable, and cost-effective hydroelectric power. With Georgia’s rich metallurgical tradition and access to both a Turkish and a Central Asian heartland of commodities, Anaklia also makes a strong case for investment in manufacturing.

Complex supply chains can make their way from Asia and Europe to Georgia. Taking advantage of energy and labour inputs at internationally competitive prices, products can be assembled by the standards required by the market of the destination country, taking competitive prices of energy and labour. Then, assembled products can be shipped to Europe or loaded onto trains to any part of Europe, Asia, the Far and the Middle East.

Embracing the world

The way the Anaklia Port was tendered and is being developed provides a hint to its attraction.

The project was tendered in a transparent process according to international standards. From the inception of the tender, the highest levels of government lent support to the process and indicated their desire to back the project. The only dispute between the government and the opposition was of the “who thought it first” variety. From a foreign policy standpoint, the Georgian government’s selection of an American/Georgian partnership is a strong expression of the administration’s foreign policy intention to continue to look west towards an institutional and regulatory environment that inspires security, confidence in contract enforcement, and respect for human rights standards.

Transparency and accountability are equally important to external security when estimating “country risk.” Besides being a good place to invest and do business, Georgia aspires to be a good place to work and live. The post-Soviet world is littered with colonies, places with tremendous potential that have never become what they could have become because they are regimented rather than being open to the world. In such places, there is no investment, no growth, no opportunity, and sovereignty is devoid of substance. We can work with this world, but Georgia chooses to be all it can become.

Georgia’s role is not the fruit of geographical destiny. Reforms, often painful, vision, and commitment have cumulatively created an opportunity. Anaklia is the window to that opportunity.

The article by Tedo Japaridze was originally published in Anaklia Magazine.

13 November 2017 18:43