Published 11:51 July 30, 2016
Updated 11:51 July 30, 2016
Batumi. If you have the feeling that the EU is in a perennial state of moaning, and there is an urgent need for a shot of optimism, a visit to Georgia may be in order.
The country is the leading reformer of the six member states of the Eastern Partnership. But, in Georgia, the resources Europe devotes for its neighborhood policy – political, economic, diplomatic – pay dividends.
Soon the country may become key trade “associate” for the EU, and not just because its Deep and Comprehensive Free Trade Agreement (DCFTA) came into effect on July 1st. It is perhaps more significant that most Georgians know the acronym DCFTA and what it stands for, which may be a relief for the European Commission’s notorious inability to brand and communicate policies.
Europe’s Launchpad to Asia
The diplomatic cliché for many years was that Georgia was a place important “for where it is more rather than what it is.”
Georgia makes part of an oil and gas corridor from the Caspian, via Georgia and Turkey, to Europe. Given the current oil prices, the significance of this vital energy corridor is often overlooked.
But, these days Georgia appears to have another claim to Europe’s attention. Georgia could soon become Europe’s Launchpad to Asia, and China’s window to Europe.
Georgia’s European software
The location is not the only reason for this development.
The process of accommodating to EU trade standards opens a world of opportunities because European trade regulation is often the blueprint for global standards.
Georgia is seizing the day.
Besides a “location-location-location” pitch, Georgia is building on its DCFTA agreement with the EU to speed up the process of concluding a Free Trade Agreement with China. That is beside preferential trade agreements with Japan, the US, and Canada.
Market access is matched by a low taxation, low regulation, and high transparency regime, of the kind that makes Georgia one of the easiest places to do business in the world, according to the World Bank.
That is not for the wine, mineral water, fruit, honey, and fertilizers that a 4,4 million transition economy can export to the world alone. These trade agreements are necessary because Georgia is becoming a logistics hub, where the “software” of market access meets the “hardware” of location and infrastructure.
For those who know the region, this kind of “software” is harder to come by than “hardware.” Location is of course what you make of it. Sandwiched between Russia and Turkey, the Black Sea and the Caspian, location has not always been a blessing for Georgia.
… Chinese hardware
Because of the location and software in place, Georgia is becoming a preferred destination for Foreign Direct Investment. In February 2016, the Government of Georgia selected a Consortium for the development of the Anaklia deep sea port, the only one of its kind in the eastern shore of the Black Sea that can be reached by Panamax-size ships.
The €3,3bn project creates a maritime corridor that links Europe to Central Asia and China.
Anaklia is a game-changing project expected to process up to 100m tons of cargo per year in full development. The size matches its significance.
The port will seat at the end of a newly developed fast-train network linking China to Europe. Freight trains from China to Poland now take 11-to-14 days, that is, in about half the time required by ship.
Besides a shortcut to China, Anaklia provides 17 million people in landlocked nations such as Armenia, Azerbaijan, Kazakhstan, Uzbekistan, Turkmenistan, Kirgizstan, and Tajikistan, with direct access to Central and Southeastern Europe. And it is also a convenient supply port for 146 million people in the immediate vicinity.
Georgia’s European Way
“Georgians don’t moan!” exclaimed Ambassador Rastislav Káčer, an experienced Slovak diplomat and Chairman of the GLOBSEC think tank. He was of speaking as co-host in an annual event that takes place for the last 13 years in the beautiful Black Sea resort of Batumi, in Georgia (14-15/07).
This year, the mood was jubilant.
For once, this was a gathering people who came to talk about how a country that truly owned European reforms could go beyond meeting benchmarks to plan a future. And there was a future to speak of.
For many diplomats working for this Slovak Presidency, as well as European Commission representatives, Batumi could very well be a Presidency highlight. Much of the talk in Brussels over the next few months may entail just a little bit more moaning.