AT THE CROSS ROADS

Turkey and Georgia have tightened their alliance over the past several years. However the competing interests of Moscow and Ankara might limit Turkey’s role in the region.

By Bulent Cinar

When the Turkish Minister of State in charge of Customs and Foreign Trade Kursad Tuzmen was presented with the Order of Golden Fleece in Georgia last February, he wowed to quadruple the annual volume of bilateral trade between Turkey and Georgia to $5 billion over the next four years. Quite an ambitious target, one may think, given the challenges facing economic relations: a grim economic outlook amid the current global crisis, the instability caused by the recent Russo-Georgian War and the mathematical possibility of achieving such a volume as Georgia’s total foreign trade was about $7.6 billion in 2008. But he has his reasons to be ambitious: Over the past decade, the two countries have forged a strong economic and political partnership.

Yet, the challenges are too serious to dismiss. The global economic crisis has been a severe blow to the Turkish economy: industrial output plummeted to record-low levels adding to the country’s already severe unemployment problem. Meanwhile, the Georgian economy has shouldered the weight of the post-conflict instability. In the short-run, this may have an adverse effect on Turkish investments in Georgia. The strategic relations, however, will have to take on the heavier burden of dealing with Russia’s efforts to curb the plans to create a second route for Caspian hydrocarbons via Georgia and Turkey.

Bridging Two Continents

Strong relations between Turkey and Georgia came naturally as both countries complement each other as they strive to realize their strategic potential. After the dissolution of the Soviet Union, Turkey was one of the first countries to recognize the newly independent states. This quick response was the initial step towards the adoption of an assertive policy in the Caucasus and Central Asia. Historical and ethnic ties to the Turkish people in the region revived the dream of expanding Turkey’s influence to these landlocked peoples who were seeking assistance and guidance in their transition to the market economy and opening up to the world. Georgia, on the other hand, needed a direct land link to the West that bypassed Russia.

What really cemented the partnership has been both countries’ desire to open a new energy corridor crossing their territories for the Caspian hydrocarbons to Western Europe. The close cooperation between Azerbaijan, Georgia and Turkey to this end bore its fruits in the Baku-Tblisi-Ceyhan (BTC) oil and the Baku-Tblisi-Erzurum gas pipelines, which are now fully operational. Furthermore, efforts towards two more major pipeline projects, Nabucco and Trans-Caspian are also underway. The former aims to bring the Caspian (and even Iranian) gas to Europe while the latter undertakes to make the entire enterprise worth its while by bringing in the Turkmen (and possibly Kazakh) gas to the BTC and then to Nabucco.

The strategic convergence between Turkey and Georgia has also given way to new efforts also based on the principle of bridging Europe and Asia. The recently initiated “Iron Silk Road” project envisages the revival of the Silk Road from Europe to China by establishing a continuous railroad link via Turkey and Georgia. To this end, Turkey has started the construction of a 76 km long railway link from the city of Kars to the Georgian border and almost completed its Marmaray project —a tunnel crossing the depths of Bosphorus that will also be utilized for international freight and passenger trains. Once fully functional, the “Iron Silk Road” is estimated to generate $7 billion annually in the commercial route between Europe and Asia, which carries an annual volume of $ 75 billion. There are further plans to extend the recently completed 500 km Black Sea Highway to Georgia. Citizens of both countries enjoy visa exemption with facilitated access at the recently modernized Sarpi border crossing.

The rapidly developing Turkish-Georgian economic relations have also created a fertile ground for private enterprises. Georgia offers an untapped market striving to attract foreign investment. And it is the logical destination for companies from neighboring Turkey, which has been trying to diversify its export markets. The volume of bilateral trade has increased to $1.2 billion in 2008 from a miniscule $18 million in 1992. Direct investments are also on the rise. As of 2008, it is estimated that around 100 Turkish companies —mostly small and medium enterprises— have invested between $450 million to $600 million in a diverse number of sectors in Georgia. Thanks to their considerable international experience, Turkish contractors have also received a warm welcome in Georgia’s major infrastructure and building development projects.

The Russia Factor

Since the beginning of its venture in the region, Turkey has always kept an eye on Russia, preferring accommodation to confrontation. As an important economic and military power closely linked to the Western institutions, Turkey has been a major actor in the region, but the lead role has always been Russia’s. In the 1990s, Turkey’s hasty attempts to fill in the power vacuum in the Caucasus and Central Asia were soon countered by a Russia that was reviving from the collapse of the Soviet Union. The brief clash resulted in a tactic understanding between the two where both countries avoided infringing upon each other’s interests.

Direct relations between Turkey and Russia have also reached considerable levels, particularly thanks to growing economic ties. Since the dissolution of the Soviet Union, Russia has been a booming market for Turkish goods and contractors. Meanwhile, in the last decade, Turkey has become heavily dependent on Russian gas. With the help of the skyrocketing oil and gas prices in 2008, Russia dethroned Germany as Turkey’s largest trade partner. This is, however, an unbalanced arrangement where Turkey is much more dependent on Russian energy than Russia on Turkish goods, increasing Turkey’s vulnerability against Russia.

Furthermore, Russia is instrumental for Turkey as an alternative that compensates for the shortcomings in its relations with the West: While a member of post-World War Western institutions since the very beginning, Turkey’s position has partially waned with the end of the Cold War. European hesitation on Turkey’s admission to the EU, as well as the harsh criticisms directed at the country, has left many in Turkey exhausted. A major arms supplier, Russia also provides Turkey with a good alternative to Western weapons systems, which usually come with political strings attached.

The Future of Turkish-Georgian Partnership

The Turkish government maintained its cool also during the recent conflict between Russia and Georgia. While confining its declarations to internationally recognized and neutral principles such as respect for the territorial integrity of other countries, Turkey assumed a neutral position and refrained from directly confronting Russia. It rigorously executed the provisions of the Montreaux Treaty governing the status of the Turkish straits while granting passage to US navy vessels and extended a lifeline to Georgia for humanitarian aid. Turkey also offered to establish a Caucasus Pact to guarantee stability in the region without resorting to aggression.

Yet, a clash of interests between Turkey and Russia seems inevitable even with the realization of a Caucasus Pact. The war in August came as part of a greater conflict between Russia and the West fought over a wide number of fronts such as the recognition of Kosovo, plans for the installation of a missile-defense system, the US insistence to admit Ukraine and Georgia into the NATO, the ongoing problems regarding the energy supply to Europe, etc. Therefore, plans to establish the Trans-Caspian and Nabucco pipelines to Caspian hydrocarbons for the European market run counter to Russia’s policy to create leverage against Europe by maintaining its monopoly on the Caspian gas. Furthermore, the risk of a clash of interests has always been part of the game and diversification of energy routes to Europe is what makes the opening of a new energy corridor so strategically important for the West in the first place. This inherent clash, as well as the presence of a larger conflict between Russia and the West, may also curb any individual initiative by Turkey to mediate between Russia and Georgia.

Regardless of the fate of the new pipelines, the importance of maintaining access to Azerbaijan and Central Asia for Turkey alone will ensure continued interdependence between Turkey and Georgia, as this is in the very core of Turkey’s efforts to cash in on its strategic location. Prospects also look bright for bilateral economic relations, as Georgia will continue to be a magnet for Turkish firms looking for new markets as well as those seeking to benefit from the favorable investment climate created in the country. Turkish firms also enjoy an additional edge thanks to closer ties between Turkish and Georgian leadership; the latter are very responsive in solving the problems experienced by Turkish businessmen.

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