Georgia’s Anaklia Port: A Geopolitical Tug-of-War

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By ZeroHedge – Jul 03, 2024, 6:00 PM CDT

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This time of year, the din of tourists can be heard in many areas along Georgia’s Black Sea coast. But the beaches of Anaklia are eerily silent year-round. On a warm day in late June, the seaside town hosted only a few stray visitors, and many businesses were boarded up.

This is poised to change. In a few years’ time, Anaklia is projected to be the site of the last port in Asia – or, from another viewpoint, the first in Europe.

That is, if you believe the government. Many residents of Anaklia do not. Plans to develop a port have been on the drawing board for decades, but the dreams of flourishing trade and tourism have never materialized.

Led by a private consortium of American and European companies, the port came close to being built under the ruling Georgian Dream party in the late 2010s. Officials canceled that contract in 2019, however, citing missed deadlines.

For five years, locals mourned the lost opportunity. Then, the town’s fortunes seemed to change just over a month ago. On May 29, the Georgian government announced that a consortium of Chinese companies submitted the only bid to build the port at Anaklia, officially reviving the largest and most important infrastructure project in the country. Officials say that it will plug Georgia into the emerging East-West trade route – the Middle Corridor – and bring enormous economic benefit.

An unintended effect of the announcement – which came one day after parliament adopted a divisive ‘foreign agents’ law – was turning this coastal settlement into the fulcrum of Georgia’s geopolitical pivot away from the West.

“I think what we are seeing in Georgia is a kind of extension of their [Chinese] cooperation in Central Asia,” said Miro Popkhadze, the Georgian Ministry of Defense’s former representative to the United Nations and an expert on security in the Black Sea region. He suggested that China and Russia both benefit from the Anaklia deal. “They are cooperating to push out Western influence from the region, in particular from Georgia.”

“Paradise”

Located just over 15 miles from the regional capital, Zugdidi, Anaklia these days seems like a graveyard of investment projects. There are empty villas, remnants of beach bars, and too many half-finished buildings to count. The ironically named Golden Fleece Hotel, a towering ornament of the beachfront, is slowly being reclaimed by nature, ferns growing tall in its once-impressive plaza.

The town’s value lies in what cannot be seen: a deep canyon splitting the seabed beneath the waves of the Black Sea. The strategic significance of the location first caught the attention of Soviet officials in the 1960s. A pair of Georgians were commissioned to come up with plans to build a port in the area in the late 1980s, but the idea never took off before the Soviet Union’s collapse in 1991.

For years the idea was dormant. And then Mikhail Saakashvili’s United National Movement came to power in 2003. Locals say that it is Saakashvili who can claim responsibility for the dramatic waterfront silhouette that visitors see today. Constructions along the shore were intended to be part of his envisioned “Lazika” complex, melding a modern port and resort city.

“It’s a shame you didn’t see Anaklia 10 years ago,” said Eka Gvilia, 60, sitting in the shade near a small food and drink stall she operates on the beachfront. “You could make a paradise out of this place. Saakashvili wanted to do that.”

When Georgian Dream came to power in 2012, it abruptly scrapped the Saakashvili blueprint, only to revive the plan three years later. The Anaklia port project was at that time led by a group of American and European companies known as the Anaklia Development Consortium (ADC). In the span of a few years, it got the closest of anyone to making the port reality.

The ADC would have operated the port for 49 years, cementing Western businesses’ control over a key economic asset. The thinking goes that any development in Anaklia – located near the breakaway region of Abkhazia and a new Russian military base – also has a security dimension.

“The closer we are to US and European companies, the safer we are,” said Sofo Shamugia, a former employee of the ADC who now heads the regional office of the opposition party Lelo. “That is why we call this project a ‘strategic project.’ If the American investments are higher, the safer we will be and the farther we will stay from Russia.”

The ADC brought in private investors and cleared 110 hectares of land, creating a “Special Economic Zone” where facilities for the port would be located.

Today, having sat untouched for years, the gated zone is an enormous patch of sand and weeds populated mostly by grazing cows. The government canceled the ADC’s contract in 2019. The official reasoning was related to unmet deadlines, but Shamugia and others believe it was a result of the project becoming politicized.

“The reason is only Putin and [Bidzina] Ivanishvili,” she said, explaining why she believes Georgian Dream’s billionaire “honorary chairman” had a hand in halting the project. “They do not want to receive American vessels on the Black Sea. And they want to close the sea for American investments and European investments as well.”

“Nothing good will come of it”

Today, Chinese companies have a hand in many of Georgia’s most important infrastructure projects, from a recently completed East-West highway to a vital mountain bypassroute to facilitate trade with Russia. Even so, China is a relatively small player in the country’s economy, yet its influence is growing every year, according to Popkhadze, the former military representative to the United Nations.

“Now, in the past three years, we see that development is accelerating, and that the relationship with [Georgia] now has a political piece to it,” he added. Last year, China and Georgia signed a strategic partnership agreement centered on developing economic ties, positioning China’s economic relationship with Georgia to rise to a level comparable with the United States and Europe.

The signs of Beijing’s growing influence have roiled Georgia’s longtime partners. A Western diplomat, speaking on background, told Eurasianet that developments in Anaklia are an unmistakable sign of Georgia’s turn away from the West.

“The Georgian government deeming this [Chinese] company, which has been involved in corruption cases, fraud, and militarization, a reliable partner is further indication that the government of Georgia is not committed to a Euro-Atlantic trajectory,” the diplomat said. The lead partner in the Chinese consortium that is tapped to build the port is China Communications Construction Company, an entity sanctioned by the United States in 2020.

The fear is not only that increasing Chinese influence in Georgia means a loss of Western influence. Concerns have also been raised about the track record of CCCC and its subsidiaries.

“[There’s] just a question about the quality and standards of the company in question,” US Ambassador to Georgia Robin Dunnigan said in an interview published on June 18. “So CCCC does not have a good reputation globally.”

Dunnigan suggested that doing business with Chinese state companies supports the “number one bankroller” of the Russian military: the Chinese Communist Party. “[Why] deepen an economic tie with the party that is financing your occupier?” she asked.

Georgia’s Ministry of Economy and Sustainable Development and the director of the government’s legal entity overseeing the project, David Javakhadze, did not respond to Eurasianet’s request for comment. In response to Dunnigan’s remarks, the Chinese Embassy in Tbilisi released a statement on June 21 calling the notion of links between CCCC and the Chinese Communist Party and Russian military “preposterous and seriously inconsistent with facts.”

“The Chinese side must emphasize that the above-mentioned statement runs counter to the San Francisco vision established by President Xi Jinping and President Joe Biden,” the statement continued.

For Anaklia locals, qualms about the Chinese consortium are rooted in perceptions of their business practices. The ADC promised to create 2,300 jobs employing mostly Georgians in its first phase alone, according to old promotional materials, but Chinese companies have a reputation for bringing in their own workers to build and operate new developments.

“Is there anything Chinese that’s good? It’s all temporary,” said Gvilia, the beachfront shop owner, pointing to shoddy construction of a new Chinese-built highway in central Georgia. “In Georgia, these Chinese companies only build something [that is good] for three months.”

Others interviewed by Eurasianet also feared that Chinese construction standards would be lower than those of a Western company. “Nothing good will come of it,” said Nugzar Kabelia, 72, who received almost $250,000 when the government purchased his land in 2018 to use for port-related constructions. At the time he was thrilled and used the money to build a new house next to the gates of the Special Economic Zone. The future of Anaklia, he thought, was bright.

But sitting on the patio of his brother’s house just next door, Kabelia cast doubt on the revived Anaklia port as two young boys – his grandchildren – peddled their bikes furiously around the driveway.

“They want a monopoly on everything,” he said of the Chinese companies. “European companies will [operate] by the rules, by the laws, peacefully,” but as for the Chinese companies, “there’s no law for them here.”

Kabelia is reluctant to discuss hypotheticals of how Anaklia might be changed by Chinese investment: he’s not optimistic that this new venture will end up differently than previous initiatives. These days, he is more concerned with the enormous empty lot next to his house that floods his property with sand on windy days.

“Nothing of value left”

After the Georgian government canceled the contract with the ADC in 2019, the consortium filed a complaint in the International Court of Arbitration, claiming $1 billion in damages. A decision in the case is pending. If the court finds in favor of the ADC, the government could be required to issue a huge payout, potentially disrupting financing for the revived project, claimed Shamugia, the former ADC employee.

Another potentially destabilizing factor is the national elections slated for late October. If the opposition wins, it plans to roll back many Georgian Dream policies, including the ‘foreign agents’ law. It could also annul the Anaklia deal, Shamugia predicted.

Meanwhile, Georgia’s Western partners are reevaluating their position in the country. Secretary of State Antony Blinken announced on May 23 that the US is conducting a “comprehensive review” of all aid to Georgia. “If we are now regarded as an adversary and not a partner, we must reconsider” assistance to Georgia, noted the Western diplomat.

The European Union has not yet altered Georgia’s membership candidate status: instead Brussels has opted to quietly downgrade relations for now.

Residents of Anaklia feel caught in the ebb and flow of geopolitics. Gvilia, the beachfront shop owner, has a son in his mid-20s who has not been able to find stable work in the area. As much as she would like him to stay in Anaklia, she believes the future is “murky.”

“Nothing’s been done here in 12 years,” she said. “There’s nothing left of what was here. It’s just remnants of luxury. There’s nothing of value left here.”

By Brawley Benson via Eurasianet.org

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