Though the initial idea about the Baku-Tbilisi-Kars (BTK) railway project was raised in the early 1990s, it was not taken seriously due to regional instability and economic difficulties. However, with the realization of the Baku-Tbilisi-Ceyhan oil and the Baku-Tbilisi-Erzurum gas pipelines in 2006, the idea of a railway connection became real once again.
The BTK, covering 850 km with a capacity of 5 million tons of cargo (upgradable to 15 million) per year and one million passengers (upgradable to three million), and connecting Azerbaijan, Georgia and Turkey, was launched in 2007 (Klimas and Humbatov, 2016:38; Uysal, 20 October 2014).It was launched without any international backing mainly because Armenia was left out due its occupation of nearly20 percent of Azerbaijani territory after a war in the early 1990s that ended in a cease-fire in May 1994.
Though initially the plan was to be completed in 2010, financial challenges as a result of falling oil prices meant that it became operational only on 30 October 2017. Azerbaijan was the driving force behind the BTK railway project. The BTK is an important step in reviving the historical Silk Road. The Silk Road refers to an ancient network of trade routes that was used from 130 BC, when Han China opened trade with the West, to 1453 AD when the Ottoman Empire decided to end trade with the West and closed the routes. However, the term is far more recent. It was coined by the German geographer and traveler, Ferdinand von Richthofen, in 1877 AD, who designated this network of trade routes ‘Seidenstrasse’ (silk road) or ‘Seidenstrassen’ (silk routes) (Mark, 28 March 2014).
However, the trade routes carried far more than silk. Trade included textiles, spices, grain, vegetables and fruit, animal hides, tools, wood work, metal work, religious objects, art work, precious stones and a lot more. It carried ideas and people too(UNESCO, nd.). Ideas and culture were transmitted changing the face of Eurasia. Many of the cities along the Silk Road became hubs of culture and learning. It connected the Han Chinese Empire with the Roman Empire. Starting at Xi’an (Sian), the 4,000-mile (6,400-km) road, in reality a caravan tract, followed the Great Wall of China to the northwest, bypassed the TaklaMakan Desert, climbed the Pamirs (mountains), crossed Afghanistan, and went on to the Levant; from there the merchandise was shipped across the Mediterranean Sea. Not many merchants travelled the entire route. In fact, the trade was handled by a series of middle men (Encyclopedia Britannica, 30 October 2017).
With changing regional and geopolitical constellations, the historic Silk Road is on its way to revival, with a strong geo-political motive.In this respect, China’s Belt and Road Initiative (BRI), which plans to improve Chinese rail and sea transportation to better connect with the global economy, strengthens the future perspective of the BTK. The Belt and Road goes through 65 countries, includes 70% of the world’s population, three-quarters of its energy resources, a quarter of goods and services and 28% of global GDP—some $21 trillion (Campbell, 2017).
Map of the Baku-Tbilisi-Kars Railway
Source: Twelves, R., 01 November 2017, From Baku with Love: The New Transcaucasian Railway.
Hence, the importance of the project is manifold, ranging from economic to strategic interests. Being a part of traditional Silk Road route plays an important role for freight and passenger transportation between Asia and Europe.The BTK increases the strategic importance of Azerbaijan by enabling it to become a transport hub between Europe and Asia. Azerbaijan has already secured its energy independence thanks to the Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum pipelines, both supported by the West and transnational oil companies such as BP and ExxonMobil. However, the same support could not be secured for the BTK railway project.
The BTK has faced serious challenges including a lack of support from international donors or Great Powers. Indeed, under pressure from the Armenian lobby, possible funding from the USA was blocked for the BTK (Tsurkov 13 November 2017).Thanks to the decisiveness of Azerbaijan, the biggest hurdle, thelack of finances to carry out the construction/reconstruction works in Georgia was solved with Azerbaijan’s offer of a loan of $775 million with concessional terms to Georgia (Klimas and Humbatov, 2016:22). It is important to note that the total cost of the BTK was above $1 billion. Thus, Azerbaijan indeed took the lion’s share of responsibility in realization of the BTK project. This showed how important a small state could be in big regional projects without international backing.
There are still many uncertainties ahead the entire Belt Road project. It passes through some of the world’s most volatile borders—Iran-Turkey, Russia-Ukraine, and the de-facto border between Western and Eastern Ukraine. China expects countries like Vietnam and Malaysia, with whom it competes for maritime influence to co-operate on the project. Another problem is that this ambitious attempt to connect the world’s richest regions in the West and the East through a swathe of poorer territory might mean that China has to extend geopolitical commitments, including military, which may not be welcome (Bohl, 2017).
In addition, the new Silk Road project has the potential of upsetting China’s regional rivals such as Japan and India. In an indication that such a challenge would be addressed Japan and India recently announced the AAGC (Asia Africa Growth Corridor) an initiative led by a partnership between India and Japan to better integrate the economies of South, Southeast, and East Asia with Oceania and Africa. In contrast to the land based routes of the New Silk Route this will be series of intersecting sea based economic triangles interconnecting cities in Central Asia which is expected to have rapid economic growth (Shepard, 2017a)
Such moves risk upsetting the traditional power in Central Asia—Russia—which as a legacy of the Tsarist and Soviet Empires has considerable influence in the region. Russia has cooperated with India on its own continent-crossing plan the North-South Transport Corridor (NSTC). This 7,200-kilometer multimodal trade corridor is expected to run from India to Russia, linking the Indian Ocean and Persian Gulf to the Caspian Sea, improving India’s connections to Iran, Russia, the Caucasus, and Central Asia(Shepard, 2017b)
A Russia, no longer under sanctions, could become a serious rival for the BTK. Additionally, China should fully commit to send goods to Europe mainly through the historic Silk Road route rather than through the Suez Canal (Twelves, 1 November 2017). Furthermore, so-called ‘frozen conflicts’ in the region should be taken into consideration. A possible restart of an armed conflict can put regional projects into danger. Therefore, in the long term, some grave challenges remain.
However, standing up to these challenges could open up new perspectives. In other words, with full-fledged commitment by China and regional countries and the solution of threatening ‘frozen conflicts’, the BTK has the potential to bring back the trade potential of the historic Silk Road and substantially contribute to the development of economies lying along the route.
The main significance of the BTK is that it will reduce Russia’s monopoly on overland transportation and boost the travel between Asia and Europe. Most importantly, the transportation cost and time will be reduced substantially. Being a piece of historic Silk Road, BTK will transport goods from China to Kazakhstan, and then through the Caspian Sea to Baku, from where it will be taken to Turkey via BTK and finally to Europe, as far as London. The time required for the trip will be around 13-15 days which is almost twice as fast as sea transportation to the same destination. Moreover, it is 50 percent cheaper than air transport (Rick, 1 November 2017; Klimas and Humbatov, 2016:11). China has been strengthening the Central Asian part of the historic Silk Road. In terms of trade turnover with the Central Asian countries, China already overtook Russia in 2008. In other words, China is Central Asia’s biggest trade partner. In 2013 China achieved a trade balance of $ 50 billion, whereas Russia had $31.5. Interestingly, in 2001 China’s trade with Central Asia was only $1.5 billion (Muzalevsky, 27 April 2016). In 2015, the Chinese president Xi Jinping mentioned that Chinese government aims at investing $46 billion in Central Asia in order to develop trade, transport and energy infrastructures (Muzalevsky, 27 April 2016). Until 2015 China have already invested nearly $40 billion to the Central Asian countries.Such a level of investment backs up the belief that Silk Road project is going to be revived in the coming few years. Benefiting from concessional loans from China and its own energy revenues, Kazakhstan have improved its transport infrastructure and build new railway connections which also includes the railway crossing the country from west to east.
Turkey is another country that eagerly supports the historic Silk Road expecting to become a transport hub between Asia and Europe. Apart from BTK, the famous Marmaray project is Turkey’s other contribution to the revival of historic Silk Road. The Marmaray project aims at connecting Europe and Asia by rail with a tunnel under the Bosphorus. This project, transporting both passengers and freight, is expected to be completed by February 2018 (Uysal, 4 July 2016).The BTK will be a crucial project to increase transport between Turkey and the CIS countries.
Initially Iran could lose out if the BTK project is realized as Turkey coulduse it to re-route goods that are currently transported to Iran via the CIS. However, in the long-run, if sanctions are liftedonce and for all, Iran will also benefit from the revival of historic Silk Road. Indeed, Iran has expressed its interest in building railway lines to Azerbaijan (Uysal, 20 October 2014).
Among others, the ministers of Kazakhstan, Uzbekistan, Tajikistan and Turkmenistan also attended the opening ceremony of the BTK railway in Baku (Mahmudov, 3 November 2017). This demonstrates the interests of all Central Asian countries to join the transportation route to transport their goods to the promising European market.
To conclude, the BTK will not only help the economies of Azerbaijan, Georgia and Turkey, it will also contribute to the trade between Asia and Europe bypassing Russia’s overland transportation monopoly. Therefore, it is not only an economical but also a strategic project. The major importance of the project is its positive impact on helping small countries to avoid Russian overland transport manipulations.
The BTK will increase both passenger and freight transportation between Asia and Europe outside Russian grip. It is the first regional non-energy project in South Caucasus connecting Azerbaijan, Georgia and Turkey. The BTK railway proved an alliance build around an infrastructure project involving small states can shape greater economic as well as political regional realities which impacts great players as well. Azerbaijan, taking the biggest responsibility for the completion of the BTK, will also take the lion’s share in terms of benefits. It will become a transport hub, if it further develops its transport infrastructures, and it will also get access better access to Europe by using the transportation infrastructures, e.g., ports of Turkey.
Previous energy projects have shaped the regional triangle between Azerbaijan-Georgia-Turkey, and BTK will further strengthen this network. BTK is a purely economic project. Yet, it certainly has political and cultural consequences as well; it can contribute to strengthening trust between nations. Historical mutual mistrust among the Chinese andCentral Asians can be challenged with growing people-to-people encounters due to trade and travel along the historic Silk Road.
Moreover, besides the establishment of new partnerships and better integration of Eurasian countries into global value chains, the BTK will also help in attracting Foreign Direct Investment to countries like Georgia and Azerbaijan. Last but not the least,the BTK will encourage construction of free economics zones and infrastructures along the route.
The phenomenon of the Islamic world- Ilham Aliyev
At the end of the twentieth century – at the beginning of the 21st century, world politics differ by its complexity and diversity. It is too important that Azerbaijan, which proclaimed independence twice during the twentieth century, maintained its this independence during the period full of globalization, international integration and social contradictions. Under such complicated historical circumstances, the prominent politician and statesman, the well-known and respected person in the world – Ilham Aliyev’s commitment and successful realization of this responsibility can be characterized as the golden age of modern Azerbaijan history. Conduction of successful foreign policy during his term as head of state has had a significant impact on the future life of Azerbaijan.
The Republic of Azerbaijan, established normal international relations with all the countries of the world after gaining independence, and in the frame of good relations with the Muslim countries, it also protects the interests and interests of the Islamic world within the Organization of Islamic Cooperation and continues to cooperate with these countries in accordance with the requirements of international law. In this regard, strengthening of Islamic solidarity in the world is one of the priority issues in the foreign policy of Azerbaijan. Namely from this point of view, declaration of 2017 year as “Islamic Solidarity Year” by decree of the President Ilham Aliyev dated January 10, 2017, is an indicator of humanistness of our state leader and at the same time it is a positive example of our country’s sensitive attitude to the Islamic Countries Union. Islamic solidarity does not only mean the solidarity of Islamic countries. This is a kind of challenge, regardless of religion, to the world’s people to live in friendship, brotherhood and multiculturalism conditions.
It is well known that sectarian wars, civil wars in the Middle East and as a result, emerged certain socio-political tensions indicate that Muslim countries are in great need of moral solidarity. The controversial political processes happening in the world, the emergence and increasingly widespread of warlike states in different countries, the strengthening of religious confrontation, and the deepening of the prejudiced attitude towards Muslims emphasize the necessity level for solidarity among people, nations and states. It can be said that one of the main reasons for exacerbating the myth of Islamic terrorism, the threat of Islamophobia, and strengthening the oppression of Islamic countries should be sought in the absence of unity and solidarity among these countries. Faith differences, contradictions in interests and positions and etc. leads to serious disagreements, and sometimes severe confrontations. Islamic religion, its sacred values, are insulted by the Islamophobia and those who are exposed to the poisonous propaganda against Islam. The bloody events that took place in the Islamic countries during last years, especially in Iraq, Bahrain, Yemen, and Syria are confirmation of our opinions. Cradles of ancient Eastern culture such as Baghdad, Damascus, Aleppo, Kirkuk, Basra and other cities are subject to serious destruction as a result of wars in Iraq and Syria and constant clashes, monuments of Islamic culture in these cities are destroyed. Caricatures of the Prophet Muhammad are given in the Western media, mosques, the holy book-Koran is burnt. The Western world’s official structures do not just condemn the acts of vandalism, but on the contrary, they protect, honor, and appreciate the performers of those acts.
The main purpose of the “Islamic Solidarity Year” is to strengthen the unity of the Muslim world and to show that Islam is a religion of peace and culture, and to achieve this goal, as President of the Republic of Azerbaijan Ilham Aliyev said, first of all, reconciliation between different sects that have historically damaged Islam should be established. The announcement of the year 2017 as the “Year of Islamic Solidarity” in Azerbaijan is a challenge to the West, which is strengthening its attacks on the Islamic world annually and promoting a new “crusades” in the 21st century. This is also a call for Islamic countries to be vigilant against the crafty intentions of the West, to demonstrate unity and solidarity. Ilham Aliyev made this important step and expressed the his own position and the position of the state of Azerbaijan. As Azerbaijan has distinguished from other states with its multicultural and tolerant values throughout its history. Islamic solidarity is also a part of this context, and this shows that President Ilham Aliyev gives great importance to the solidarity of the Islamic world. As political scientists point out, some initiatives have been made to call Muslim countries to get unified around religion. For the first time in history, the head of our state has sent a political message to the Islamic world, pointing to the importance of acting from unified position, to achieve unity and at the same time integrate into the world. It should be noted that the Order of the President of the Republic of Azerbaijan on the declaration of 2017 year as“Year of Islamic Solidarity” states: “The Republic of Azerbaijan has established mutually beneficial relations with the Islamic world by being selected as a member of the Organization of Islamic Cooperation, ISESCO and other respected organizations joining muslim countries and has been an organizer of a number of important cultural forums of global importance. Azerbaijan has made a great contribution to the founding of tolerance environment, multiculturalism, intercultural and intercivilizational dialogue, and the promotion of Islamic values in the world. The prestige gained by Azerbaijan in the Islamic world got its expression in this results that Baku and Nakhchivan cities declared as a capital of Islamic culture in 2009 and 2018 respectively. And the decision to hold the IV Islam Solidarity Games in Baku in 2017 create favorable conditions for our country to take the next practical steps in strengthening the Islamic solidarity. ”
Only state leader of the country like Azerbaijan, where multiculturalism and solidarity are established, and citizens of different nationalities, religions and sects live in peace, has a moral right to give such a decree. The promotion of the Islamic Solidarity initiative is related to the challenges of the present and controversial processes that take place because of various reasons in the Islamic world. As it is seen here, the importance of Azerbaijan’s reputation in the Islamic world, as well as the need to strengthen the solidarity of Islamic countries, as well as the actuality of holding the Islamic Solidarity Games in Baku, the capital of the Republic of Azerbaijan in 2017, have been extensively and logically expressed in this decree. With Islamic solidarity policy, Azerbaijan, as unifying facility of the Islamic world, confirms that these religious values are indeed, humanistic, moral values and reinforces belief to being of these ideas are an effective means of creating a shared living and stability environment not only in the Islamic geography but also in the entire world. Azerbaijan, which has created a partnership of cultures and ideas between East and West, fulfills the function of a of solidarity bridge, thus demonstrates its commitment to universal values, as well as its commitment to the highest values of the Islamic religion, which had a special place in the past and continuing to keep its value today. Thus, Azerbaijan uses all the means to establish steady stability in a globalizing world and propagates the peacekeeping, reconciliatory position in a unique way that is essential for today.
We suppose that this humanist initiative of the President of Azerbaijan, Mr. Ilham Aliyev, will promote the expansion of cooperation relationship between Muslim countries in the world and further strengthening of the Islamic solidarity. The strengthening of Islamic solidarity, in its turn, will play an important role in ensuring tranquility and peace in the Middle East and other regions.
Economic Growth of Ukraine Depends on Completing Pending Reforms Quickly
Ukraine’s economy grew by 2.5 percent in 2017, the second year of modest growth, according to the World Bank’s latest Ukraine Economic Update. Growth in manufacturing, services, and construction was robust, but weaknesses in the agriculture and mining sectors, together with delays in key reforms to further strengthen investor confidence contributed to the modest overall growth performance.
“Faster growth is needed to improve living standards for the people of Ukraine who continue to hurt from the economic crisis of 2014-2015,” said Satu Kahkonen, World Bank Country Director for Belarus, Moldova and Ukraine. “This will require decisive measures in the next few months to complete pending reforms to bolster investor confidence and safeguard macroeconomic stability.”
Economic growth is projected at 3.5 percent in 2018 if pending reforms in anticorruption, land markets, state-owned banks, and privatization can be advanced in the next few months. This would provide an important signal to investors. If reforms are delayed, growth could drop below current levels in an uncertain macroeconomic environment as financing risks rapidly increase.
Ukraine faces major financing needs to repay public debt and fiscal pressures from higher public sector wages and social benefits in 2018 and 2019. Mobilizing adequate international financing by completing pending reforms in the months ahead will be important to maintain macroeconomic stability.
Meeting the fiscal deficit target of 2.5 percent of GDP in 2018 will require improving targeting of housing utility subsidies, making further wage increases contingent on measures to optimize the school and hospital network and public-sector staffing, and identifying affordable options to update public sector pensions.
Fiscal Pressures and Reform Options …
According to the World Bank’s Special Focus Note on fiscal pressures and reform options, Ukraine has made progress in reducing its large public spending since 2014. However, sustaining these gains while also improving the effectiveness of public services will require implementation of reforms in education, health, public administration, pensions, and social assistance in a fiscally affordable manner.
Public expenditures increased significantly in 2017, by 11.7 percent in real terms, reaching 41.5 percent of GDP, due to the doubling of the minimum wage and over 40 percent increase in wages of teachers and doctors. Spending on social programs also increased.
The recently adopted reforms in education, health, and public administration seek to improve compensation for teachers, doctors, and public servants to strengthen incentives and attract quality personnel. Achieving this in a fiscally affordable manner will require coordinating further increases in salaries with time-bound measures to optimize staffing and the school and hospital network.
The social assistance package in Ukraine is not only fiscally costly—costing 5 percent of GDP in 2017, but is also poorly targeted—with only 30 percent of assistance going to the bottom 20 percent of the population. Fixing this will require improved targeting of the large HUS program.
The recently adopted pension reform helped improve adequacy of benefits and stabilize fiscal costs. Additional initiatives going forward should avoid undermining these core objectives of the pension system. The timeline to create a funded pillar system by January 2019 needs to be reconsidered since this will undermine contributions to the pay-as-you-go system, create contingent fiscal liabilities, and face inadequate availability financial instruments.
Since May 2014, the World Bank Group has provided a total of more than US$5 billion to Ukraine (including 4 development policy loans, 7 investment operations and 1 guarantee) from the International Bank for Reconstruction and Development (IBRD).
The World Bank’s current investment project portfolio in Ukraine amounts to US$2.5 billion. Investments support improving basic public services that directly benefit ordinary people in areas such as water supply, sanitation, heating, power, roads, social protection and healthcare, as well as private sector development. Since Ukraine joined the World Bank in 1992, the Bank’s commitments to the country have totaled over US$12 billion in about 70 projects and programs.
Baltic States: Missed opportunities in global politics
We are living in the world where the facts “who makes” and “where it is made” are much more important than “what for” issue. Nowadays the world political scene is divided between superpowers supported by their allies. In order to punish each other for having opposite views the sides criticize any step made by the opponent.
Unfortunately, this happens even in case of evident necessity. It is not the secret that the modern system of international security is unable to perform all demanded functions any more. It needs to be reformed. Another question is who and where will decide.
The most likely political platforms for this are the United Nation Organization and OSCE. But the preparatory stage for any new decision should become different forums and conferences, such as the Munich Security Conference and the Moscow International Conference on Security.
This year the Munich Security Conference took place on February 16-18. More than 30 heads of state and government and over 100 cabinet ministers from across the globe came together at the forum for discussions on major international security challenges. As far as the Baltic States concerns, President of Estonia, as well as Lithuanian and Latvian ministers of defence did not miss the event because it was of great importance for the future of their countries and all Europe.
Just another situation developed in March. In Moscow an annual International Conference on Security was held on April 4-5. The fight against terrorism and other pressing security challenges were one the agenda. There is not a single person who is not affected by the discussed topics.
Many European countries considered it unnecessary to visit the event. It makes no sense to blame them for this choice. They have a strong and common view on what is happening in the world. But if abstract from the current geopolitical situation and confrontation between Russia and the West, politicians should see such kind of forums as a chance to find even weak possibilities to make the world safer. Probably the main reason for not attending the event is in the fact that politicians forgot how to listen to each other. They forgot that only discussing controversial issues makes possible to reach a consensus.
Another issue that deserves attention is the list of participants, which is of great interest to the analysts. According to the Russia’s Defense Ministry, representatives from at least 95 countries, three deputy prime ministers, 30 defense ministers, 15 chiefs of staff, 10 international organizations and military delegations have come to participate in the International Conference on Security. They include defense ministers of India, South Africa, Iran, Iraq, Pakistan, Vietnam, Azerbaijan, Belarus, China, Armenia, Mozambique, Serbia, and Israel. Thus, almost half of the UN member-states (total number is 193) sent representatives to the Conference.
It becomes evident that Russia really has powerful partners and allies that are ready to discuss even difficult questions and find mutually beneficial solutions. Those who came do not necessarily agree with Moscow and support its foreign policy but they clearly understand that unfortunately without Russia it is impossible to improve the International Security system.
This fact admitted Thomas Greminger, secretary-general for the Organization for Security and Co-operation in Europe. He stressed that Russia is a key partner in issues of the European security. But the Baltic States blinded by hatred to Russia ignore ignored the event thus putting political ambitions higher than common sense.
It is obvious that Russia is not satisfied with NATO’s actions near its borders. NATO in its turn disputes the lawfulness of Russia’s behavior. Every day confrontation becomes harder and leads to the arms race. The only way out is to discuss things and find the way out. The Baltic States as usual lost the possibility to express their position on key international security issues and be the active actors in global politics.
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