Traveling along the ancient Silk Road from the east to the west and from the west to the east, the caravans carried with them wisdom and innovation, ideas, merchandise and experience.

The Silk Road crossed all of Asia, traversing Tian-Shang and the Fergana Valley from the Great Wall of China, and went on through the Southern Caucasus and Georgia to Europe.

Georgia, a small piece of land at the crossroads of Europe and Asia, provided the shortest and most convenient way of bridging the two continents. Through this trade route, the caravans of camels brought in silk and other exotic merchandise, oriental wisdom and spirituality to Europe.

The Silk Road flourished for a long time, despite whims of nature, despite wars and turbulence, controversies and different religions. This road linked two worlds, two great civilizations - the east and the west.

Later, however, due to historical vicissitudes, the Silk Road became gradually marginalised and eventually stopped functioning altogether.

Perspective

With the break-up of the Soviet Union, the countries of the Caucasus and Central Asia were left with a largely paralyzed transport and trade systems.

No one doubts that routes could become a source of conflict, a lever of control or an obstacle to progress. Or they could become an instrument to consolidate peace and prosperity, serve as a secure link to the outside world.

In May 1993 at a meeting in Brussels that brought together representatives of the European Union and the countries of Central Asia and the Transcaucasus, the TRACECA project (Transport Corridor Europe-Central Asia) was launched. It was decided to start up this EU-sponsored programme of technical assistance in order to pave the way for the east-west transport and trade corridor running from Europe to Asia through the Black Sea, the South Caucasus and the Caspian Sea toward Central Asia.

The Europe-Caucasus-Asia corridor is in fact the revival of the Silk Road of old and thus the revival of natural historic ties.

The TRACECA project aimed to set up a communications network, with its necessary infrastructure, running between Europe and Asia. It was a helping hand extended in response to the diplomatic effort and hard work.

To borrow the language of the protocol, the long-term and strategic goals of the project are as follows:
• Supporting the political and economic independence of the project’s participating states by increasing access to the European and world markets via the revived routes;
• Promoting deeper regional co-operation among the participating states;
• Attracting international financial organisations and private investors;
• Linking TRACECA routes with trans-European infrastructure networks.

Thus TRACECA, the project of the century, was launched.  The revival of the Great Silk Road began.

The Brussels meeting was followed by meetings in Alma Ata, Vienna, Athens, Tbilisi, and Baku.

Representatives of the countries participating in these gatherings have stressed the necessity to establish a Pan-European Transport Network and integrate the TRACECA route with the nine multi-modal transport corridors endorsed by the Crete Conference in March 1994.

Linking the TRACECA Corridor to the nine Pan-European transport links, as well as the realisation of the concept of the Black Sea Pan-European Transport Area is of great importance to Georgia.

In order to discuss the development of the Black Sea Transport Area to promote inter-regional and international multi-modal transport by linking together the Trans-European Transport Network as well as the Pan-European Transport Corridors in Central and Eastern Europe with the littoral countries of the Black Sea and beyond towards Central Asia and the Near East, a high-level transport conference of the TRACECA and BSEC participating countries was held in Tbilisi in April, 1997 on the initiative of  President Shevardnadze and with the support of the European Commission.

This meeting became the precursor of the Third Pan-European Transport Conference which took place in Helsinki in June 1997 determined four Pan-European Transport Areas (PETrA): the Mediterranean, the Adriatic, the Barents and the Black Sea.

The Caucasian Corridor is indeed the project of the century, multi-modal and global, to which many other important projects connect: the INOGATE - interstate projects for oil and gas, the Caucasus railways rehabilitation project, air routes of the southern hemisphere, and many others.

Reality

For many all this may sound strange and remote. What indeed are the Pan European Transport Area, corridors, routes? What are they to us ordinary mortals who receive no pensions, have no money to buy bread, or have been displaced from our homes? What do they promise to give us? Or modern silk - oil?

These are the questions that we cannot find answers to. Say the pipeline. The famous early oil pipeline that has already been constructed and that the whole country has so eagerly awaited.

This is the question that needs to be answered - what should we expect of the pipeline? Perhaps all the talk about the pipeline was aimed at making us see the pipeline as a panacea. Or maybe the opposite is true and its significance has been oversimplified to us and we have never believed that these global projects indeed meant something.

What can we do? This is what we the Georgians are - everything or nothing.

At the same time the implementation of the project created jobs for 25 thousand Georgian citizens.

In the process of the construction of the pipeline and related facilities, the citizens of Georgia were paid 22 million USD in salaries.

The national budget has received 4 million USD in income taxes from the construction of the pipeline.

6, 2 million Lari has been transferred to the social security, health and employment funds.

The work of the GIOC with the foreign partners in the process of the implementation of the early oil pipeline has convinced  investors that the development of a mutually beneficial and professional relationship with Georgia is possible and that Georgia can make an important contribution in reducing the investors’ risks and in creating normal conditions for work.

And this has been only the first project of this kind in Georgia.

Always and everywhere, a road means hope and most importantly the opportunity for work and development of the country.

This road will revive, the road connecting Europe and Asia, the modern Silk Road bridging two worlds. And the caravans will again travel from the east to the west and from the west to the east.

And the caravans again will bring wisdom and novelty, ideas, goods and experience.

Caravan 1  -  Oil Pipeline

It is difficult to relate all at once, to describe the TRACECA Programme in minute detail, with all its intentions and prospects, with all the projects it involves. Railroads, gas infrastructure, air routes, construction of ports and bridges, export of cotton, cargo transportation. We intend to provide a detailed picture of all these gradually, and without haste. For the starters, we are  looking into the prospects of oil transportation across the region. Says Mr. G.Chanturia, President of the Georgian International Oil Corporation:

First, a few words about the concept itself. The idea of a corridor through the Caucasus - i.e. the Eurasian Corridor - originated in 1992, when the Head of the Georgian State set up a very small confidential group, with Vazha Lordkipanidze, Tedo Japaridze and myself being its members. We  set to formulating a conceptual framework for the idea to use the naturally existing corridor between the two seas for the export of oil, development of rail and motor roads, intensification of  ports. For almost three years, up until early 1995,  we  maintained confidentiality about our work.  We were meeting at the President’s office late at night. The situation was far from being an easy one, with the paramilitary formations rampant in the country. We feared that someone could seize the idea, that mafia quarters could get involved, etc.

In 1990, en route his visit to Japan, Eduard Shevardnadze stopped at Vladivostok. It was during that brief visit that the idea to revive the Great Silk Road was first articulated. Japan possessed a considerable capital to invest, and it was prepared even then, against the background of volatile realities of the early post-soviet scene,  to allocate the requisite  funds in order to study a feasibility of such an initiative. In 1994, with  Heidar Aliev’s come-back to power, certain endeavours vis-‡-vis oil, though at that time low-profile  ones, started in Azerbaijan. These were initial steps that later culminated in the setting up of a consortium. Early in 1994, I visited Azerbaijan on a special assignment from the President of Georgia (I have never mentioned that before), and  met with President Aliev who fully shared our idea. This was followed by a meeting in June 1994, when the chief executives from 18 oil companies visited Georgia. We had to offer them certain guarantees, to give something up. At that time there was no laws to protect property rights, foreign investors had no legal guarantees for unimpeded flow of capital. The President of Georgia provided all the necessary guarantees and assurances to the interested investors, and suggested considering the relevant agreement in the Parliament, to give it the necessary legal status - that of a law.

With the newly established consortium registered on 20 October, 1994, we  moved on to intensive consultations with the  World Bank, US Government, European Commission, and oil companies. The TRACECA concept, too,  saw its development in the same 1994, and so did the INOGATE Programme, that was launched in October, 1994. These programmes clearly defined the role to be played by Georgia, though there was a number of other options that had their supporters.

Shortly afterwards, Terry Adams came to Georgia on his first visit and met with the President, to discuss a possible oil pipeline route across Georgia. On 19 October, 1995  two routes were finally chosen - the so-called Northern Route, and the one running through the territory of Georgia, the latter being the most viable one.

At the same time it was necessary to rule out any possibility of rivalry between Russia and Georgia. We stated again and again that neither then nor in future could Georgia be seen as Russia’s rival in oil transportation matters,  that the route via Georgia was meant to be a parallel, rather than an alternative,  route, that both routes were to be seen as parts of a single system of  oil pipelines. Finally, the decision was made, followed by 4 months of work to draft an agreement.

On 8 March, 1996 Heidar Aliev, President of Azerbaijan,  paid a visit to Georgia during which the sides signed the  Agreement between Georgia and Azerbaijan,  and a package of other agreements.

However, the Pipeline Project documentation was changed and amended several times, one of the reasons being the environmental issues involved. These issues were addressed comprehensively in the Environmental Impact Assessment Study - a unique work in 7 volumes that, for the first time in Georgia, formulated the principles and approaches to guide the country in implementing such large-scale projects, as well as the criteria to apply in assessing the environmental situation. The EIA resulted in significant changes made in the engineering design of the Project. One of the requirements contained in the EIA was to ensure that at all river crossings the pipeline was to pass under the river-bed, to meet the existing safety standards.

There was another extremely important problem that we had to address. The Supsa site is a marshy area, and the ground there does not favour construction work. So, it was decided to build a sea  terminal. We strongly opposed that option. Thus, we brought together experts from 9 research centres and asked them to draw their expert conclusions on Supsa’s geology. As the work proceeded, we invited two meetings attended by Mr. Terry Adams and his team, with the participation of experts from the Georgian Academy of Sciences. Georgian scientists pointed out that through the use of special technologies it was possible to build oil storage tanks in the Supsa area. This brought additional 75 million USD investments into Georgia.

Speaking in realistic terms, there was one factor that to a considerable extent determined our success in accomplishing the Project. Namely,  that implementation of the project in Georgia was coordinated by the President of the country, which  in fact ruled out any bureaucratic obstacles and interventions, any private interests. One more important factor contributing to our success is that the GIOC is a western-style company operating on the principles of openness and transparency. That is why foreign companies see us as their partners.
What are our prospects for future?

Two large-scale projects will soon be launched in Georgia. One project envisages  construction of a refinery at  Supsa, with an annual  capacity of 15 million tons of oil. The first stage of the project - installing of a 2 million ton oil-refining capacity -  is financed by the US Trade Development Agency (USTDA).  A number of major oil companies are committed to take part in this project: as the current world prices for crude oil are relatively low, it must be advantageous for them to move oil to the Supsa area, the process per se being very inexpensive, to have it refined in Supsa and then to export petroleum products. The same project envisages construction of a petrochemical plant, a unique one, too. In this regard our prospects are very good, since we the Supsa terminal, an oil transport corridor,  transportation network, storage tanks, the necessary infrastructure are in place already, which taken together bring the production costs down.

High on the agenda are  issues involved in  future oil pipeline projects that  are meant to  ensure transportation of the increasing volumes of Caspian oil to the world markets. Negotiations are on with all the interested stakeholders.

Coming back to the TRACECA, I would say that the launching of this Programme marked a beginning of an entirely new system of transportation. First, before 1995 all the equipment, machinery and materials needed for oil production had been imported to Azerbaijan and, in broader terms,  to the Caspian region via the Volga-Don Canal. Transportation  of pipes and drilling equipment for the Western Route Pipeline Project through the territory of Georgia helped convince potential investors that the corridor through Georgia was the shortest, fastest and the most cost-effective  option. Today, 95 % of cargoes needed in oil industry is brought into the region through the ports of Poti and Batumi. Development of the Project clearly demonstrated to transport and investment companies the viability of the route. All cargoes bound for the East will be moving through the territory Georgia,  and onwards. Implementation of this Project made Georgia an increasingly attractive country for foreign investments due to the investment climate it provides, mechanisms to protect investments, and low risks. How Georgia is seen by international organizations, insurance companies, the World Bank, other entities is extremely important for us. And one more thing, probably the main one -  Georgia is taking on a new function in the present-day world, that of  strategic partner.

Caravan 2 - Gas Pipeline.

President and Chairman of the Supervisory Board of the Georgian International Gas Corporation Aleko Gotsiridze will speak of the prospects of gas pipeline in Georgia.

This and other important caravans of the Silk Road will be discussed in the next issues  of this magazine.

Wait for the Caravan!

MARINA VASHAKMADZE