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Georgia Positions Itself on China’s New Silk Road

Author: Franziska Smolnik, Senior Associate, Stiftung Wissenschaft und Politik (SWP, German Institute for International and Security Affairs)
The following citation is originated from the “SWP Comment

China’s importance and presence in Georgia are growing. The Belt and Road Initiative, Beijing’s vision of a new Silk Road, has met with active approval here – in contrast to a number of West European capitals, where the project is instead increasingly viewed with reservations or scepticism. The government in Tbilisi is carefully positioning Georgia as an essential part of the south Eurasian corridor. In order to profit from future trade flow between China and Europe, it has implemented a series of measures. In 2017, it became the first country in Eurasia to conclude a free-trade agreement with China. Large infrastructure projects are being carried out to facilitate transit. Georgia is also using formats such as the Tbilisi Belt & Road Forum to promote its location. However, whether the new Silk Road will be a purely win-win situation for the country, still remains to be seen…

Conclusion and Outlook

China’s Belt and Road Initiative has hit a chord with the Georgian government. It is compatible with the government’s own attempts to establish Georgia as a transport hub and to capitalise on its geographical position between Europe and Asia. To make the country attractive as a regional and interregional hub, Tbilisi is counting in particular on a network of free-trade agreements as well as the expansion and upgrade of its infrastructure. The fact that, in 2017, Georgia was one of the first countries ever to receive a credit from the Beijing initiated Asian Infrastructure Investment Bank (whose founding members include Georgia) is seen as proof, along with the free-trade agreement, of Georgia’s significance for the Chinese.

As a trade hub, Georgia wants to profit from more than just transit. It also intends to further boost its domestic economy. When the first building phase of the deep sea port at Anaklia was launched in December 2017, Prime Minister Kvirikashvili said the project would turn Georgia into a “logistics and industrial development hub”. As an export platform, Georgia wants to attract foreign companies that will relocate their production or processing facilities so as to benefit from the DCFTA with the European Union or the free-trade agreement with China for goods “made in Georgia”. Whether these plans will be realised remains to be seen. Georgia certainly requires further measures to harmonise with European standards and regulations so as to profit comprehensively from the DCFTA. It will also need to make greater efforts to train skilled labour so as to strengthen the export orientated sectors of its economy.

Not least of all, Georgia’s very active integration into the Belt and Road context shows the independent mindedness of its foreign policy. While that policy continues to be primarily orientated towards the West, it is increasingly open towards the East. How far Georgia’s agency (both financial and political) will go given the huge asymmetry between China’s economy and its own is an open question. So far, the Georgian government has emphasised the economic importance of the new Silk Road and its associated Chinese commitments in the region. Georgia’s geopolitical considerations mainly concern Russia – whether they be opportunities for fencing in its neighbour to the North by increasing Chinese economic interests in Georgia, or positioning the southern Eurasian route as an alternative to the northern routes dominated by Moscow.

Tbilisi stresses that its relations with the West and China complement each other. In several West European capitals, however, there are growing doubts as to whether the Belt and Road Initiative as promulgated by China will be equally profitable for all sides. Instead, suspicions are that the Initiative is a Chinese geostrategic project. For Georgia, this means that the extent to which its two foreign policy orientations can be reconciled will only be proved in practice.

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