The Port of Poti was humming with activity as we toured the facilities. Cargo handlers moved shipping containers and bulk materials onto small ships destined for Istanbul and onward transshipment throughout the world. The port’s management was buzzing with the previous day’s news of yet another delay in the development of a competing deep sea port capable of handling larger cargo vessels. The competing port would be located just outside the city of Anaklia near the Abkhazian border.
It’s a heady time to be in the shipping industry in Georgia. In recent years, cargo volumes have increased 16% annually driven by the steady improvement of transport infrastructure in the Caucasus and Central Asia. Mamuka Khazaradze, the founder of TBC Bank, the largest financial institution in Georgia, competed for and won a bid to develop Anaklia in collaboration with the previous elected government. Subsequent events have led to a political crisis that could alter the balance of power in Georgian politics. Our research trip turned out to be even more timely than we had expected.
The origins of the current dispute can be traced back to imperial Russia. The Port of Poti lies at the mouth of the Rioni River in western Georgia. The Russian government built the facility in the late 1800s, and it rapidly became one of the largest ports in the Black Sea. But Poti was flawed from the start. The Russians located the port in an area with poor hydrography for deep sea expansion.
Almost 150 years later, Poti is dredging its channel to support larger oceangoing vessels. Unable ever to achieve the scale of the Anaklia project, it could still make Anaklia less economically viable by increasing its cargo capacity. There may simply not be sufficient demand in Georgia for two major container ports.
The Anaklia project has been characterized by drama since the outset. A competition for development rights emerged between two consortiums, one backed by U.S. participants and the other by Chinese. After the U.S. consortium won, Russia began a disinformation campaign against the project to protect its own ports and to deny the United States a facility capable of hosting Navy warships. The then-new Georgian Dream government, which has ties to the Port of Poti, indicted Mr. Khazaradze on questionable money laundering charges, causing him to step down from leadership of the project.
This week, the Anaklia Development Consortium announced a halt to its work on the project until the government demonstrates a commitment to the risky endeavor. Mr. Khazaradze, after his indictment, formed a new political party to challenge the ruling Georgian Dream party, controlled by billionaire Bidzina Ivanishvili, in the next election.
During our trip, a civil society activist noted that “it is quite difficult to get Georgians excited about infrastructure.” Whether he intended to or not, Mr. Khazaradze has done just that.
-- Ben D., Cohort 4