Chronicles of transport deadlock: Armenia's cargo carriers face loss
Review by Caliber.Az

ANALYTICS  13 February 2023 - 13:43

Commercial attractiveness and geographical advantages of transport routes crossing the territory of Azerbaijan have traditionally outweighed "ideological" discrepancies with all global partners of our country. After Baku's brilliant victory in the 44-day-long war, the meaning of these simple geographical realities seems to have reached the hard-headed politicians in Yerevan as well. Nevertheless, since last year, the national clinical symptoms have again prevailed in our neighbouring country - the refusal to cooperate "with the Turks" even to the detriment of their own business interests. As usual, Yerevan's stubbornness strikes back: these days, over 1,000 Armenian trucks are stuck in a kilometre-long jam on the Upper Lars pass in Georgia.

Armenia, which has been in a transport-logistic deadlock for the past three decades, is unable to reduce the cost of transit of exports and imports, and its agro-industrial and mining complexes suffer most from this long-standing problem. Many sober politicians and especially the business community in Armenia have long realised the ineffectiveness of a geographically isolated economy. Nevertheless, Yerevan continues its destructive foreign policy with zealous obstinacy, rejecting all attempts by Baku and Ankara to make peace and unblock communications. Even today, Yerevan is refusing to participate in the Zangazur corridor project, the implementation of which would help Armenian businesses to overcome export-import difficulties and problems with the lack of raw materials.

The neighbouring Iran is particularly active as a tempting devil, categorically rejecting the possibility of forming a transport bridge across Zangazur, although some EU countries also support alternative transport prospects, persuading the Armenian establishment not to rush to establish cooperation with Azerbaijan and Türkiye.

As has happened in the past, the bitter fruits of Armenian stubbornness are being reaped by the people and business circles of the 'land of stones'. These days, due to harsh and unstable weather conditions, as well as traffic jams on the highway, there is a congestion of Armenian trucks at the Upper Lars checkpoint in Georgia. This mountainous road has been closed to heavy vehicle traffic since February 5, and according to Russian and Georgian customs authorities, as of February 10, more than a thousand Armenian heavy truck camions are waiting to pass through the Upper Lars multilateral automobile checkpoint (MACP) on both the Georgian and Russian sides of the border. When assessing the difficult weather conditions observed in February throughout the South Caucasus, experts cannot judge how soon the situation will be resolved and do not exclude the possibility of the recurrence of traffic jams at the MACP in the next period.

The situation on this road is now familiar, repeated almost every year from November to March, when precipitation, severe frost and often snowfalls in the mountain passes of Georgia turn all roads into impassable deadlocks for many days. Understandably, all this delays the movement of freight transport, disrupting delivery schedules of raw materials, goods, equipment and other cargo to Armenia and increasing the already high costs of freight haulers. But what can be done, political misbehaviour has its own and very high price. Trying to get out of the logistical impasse, the Armenian Transport Ministry's officials are trying to adjust the initially failed routes. The other day, Armenian Minister of Economy Vahan Kerobyan and the head of the Eurasian Development Bank (EDB) representation Armen Melkikyan met in Yerevan to discuss the prospects of investments in the expansion of the customs checkpoint at Upper Lars pass. However, it was found out that EDB is not going to credit this undertaking, but only considers the possibility of providing a small technical tranche to support the preparation of a feasibility study for roadside infrastructure and a wholesale and logistics complex, improvement of road safety and creation of favourable conditions for drivers. The main funds to implement the above projects have yet to be found, because as a financial instrument of the Eurasian Economic Union, the EDB is unlikely to lend for large-scale infrastructure projects in Georgia, especially given the very difficult Georgian-Russian relations. Nor is it likely that Tbilisi's investment plans envisage tangible expenditure on facilitating the movement of Armenian carriers in the near future. But most importantly, even the implementation of such undertakings will make little difference, given the climatic factor that hangs like a sword of Damocles over transport projects in difficult mountainous terrain.

Recently, the Armenian media have been increasingly writing about the prospects of freight traffic along the route parallel to the Upper Lars pass, and of course, the main argument for Yerevan in its hopes for this alternative is the reluctance to cooperate with Azerbaijan. At issue is the construction in Georgia of a nine-kilometre tunnel under the Cross Pass, which is part of a bypass road for the avalanche-prone (Gudauri-Kobi) section of the Mtskheta-Stepantsminda-Lars highway. The project envisions the construction of a 23-kilometer-long two-lane concrete road, 5 bridges and 5 tunnels, which is designed to ensure smooth traffic throughout the year. However, this almost $400 million project (EBRD and ADB loans) has been repeatedly delayed and is scheduled to be completed in early 2025. Not to mention the fact that the speed of cargo transfer along the mountain roads and the capacity of the tunnels also make it hard to expect any large increase in traffic.

"There is still a congestion of Armenian trucks at the Upper Lars checkpoint, and the ferry project from Poti, Georgia to Russian ports in the Black Sea, long promised by the government of Nikol Pashinyan, is still hanging in the air, all of which limits Armenian agricultural exports, making them more costly," complained Armenian expert economist Suren Parsyan last December.

The situation is indeed stalemate, and despite numerous negotiations between the Armenian agencies concerned and the Georgian Ministry of Economy to establish a sustainable ferry crossing between Poti and the Russian port "Kavkaz" on the Sea of Azov is still far from being resolved. Armenia has even expressed willingness to subsidise cargo transport along this route. But this issue is affected by a bunch of economic, geopolitical and military problems: the "Kavkaz" port is located on the Chushka spit in the Kerch Strait in the Temryuk district of the Krasnodar region of Russia, i.e. near the epicentre of the Russian-Ukrainian war. Consequently, few forwarders or ferry operators today would carry cargo in the war and mine threat zone, not to mention the refusal of international insurance companies to conclude contracts and compensate losses in case of loss of cargo and watercraft in this dangerous region of the Black Sea. In fact, in a recent (February 3) interview with Armenpress Armenian Minister of Economy Vahan Kerobyan once again did not name any specific dates for the launch of ferry communication between Georgia and Russia.

All of the above is an objective reality, not the "machinations of enemies" so often sought in the government offices of Yerevan. And logistics prospects for Armenia could have been completely different if the country agreed to normalisation of state relations and the development of business cooperation with Azerbaijan. After all, for all sober-minded people the advantages of the Zangazur route are quite obvious: it is shorter, safer and faster, runs in the lowlands and, accordingly, is not exposed to climatic risks even in the cold winter period.

Caliber.Az