China In Eurasia

ANAKLIA, Georgia -- In the 20 years that Data Gabelia has worked at the Hotel Anaklia, he's seen the fortunes of the Black Sea resort town of 1,500 people rise and fall.

In the 2000s, he saw money pour into Anaklia as then-President Mikheil Saakashvili sought to turn it into a top vacation destination as part of a development push.

After Saakashvili lost power in 2012, the new government abandoned the bold plans for Anaklia, leaving behind a string of half-built structures and abandoned beachside hotels and restaurants.

Since then, the town has toyed with transforming itself into a site for Black Sea partygoers by hosting music festivals and summer raves. But they have all since relocated -- leaving the western Georgian town behind.

“In the time that I’ve been here, the trend is that things seem to be moving backwards, not forwards,” Gabelia told RFE/RL.

But now Anaklia may be donning a new identity, this time as an unlikely site for geopolitical intrigue that could place Georgia at the epicenter of a global competition for trade routes and infrastructure.

This is because the government has revived an ambitious and controversial plan to build a deep-sea port at Anaklia amid amplified interest in international trade following Moscow’s full-scale invasion of Ukraine, where Western sanctions on Russia -- the pathway for the majority of transcontinental trade -- have left freight companies and governments eyeing new routes.

If successful, it could revolutionize Georgia’s role as a key transit point between Europe and Asia and loosen the country’s status as a bottleneck for global trade.

The megaproject’s future is also caught up in political controversy at home and geopolitical jostling abroad over who will build it. This could have far-reaching fallout for Tbilisi as it seeks candidate status with the European Union and has been worrying Brussels by building closer ties with Russia in recent years while also increasingly turning to Chinese companies to build its large-scale infrastructure.

With the bidding process opened, Anaklia could become an important bellwether to determine if Georgia continues down a path of further integration with the European Union and the West or pivots toward closer ties with Russia and China.

“We are in an abnormal moment of geopolitical risk around the Black Sea [because of] Russia’s invasion,” Romana Vlahutin, a visiting fellow at the German Marshall Fund and former EU special envoy for connectivity, told RFE/RL. “It’s hard to plan for something when things are this volatile, but we know that what we don’t do, others will.”

The leading alternative to avoid transit through Russia is through the so-called Middle Corridor, which connects China and the countries of Central Asia to Europe through Georgia and Azerbaijan.

The route has also received enhanced interest from Brussels, which is looking to fund strategic infrastructure that cuts Russia out of its trade networks and would compete with China’s Belt and Road Initiative (BRI), the global development project worth hundreds of billions of dollars that Beijing has used to build infrastructure and grow its influence.

“If [Brussels] is serious about making the Middle Corridor happen, then you can’t really do it without Anaklia,” Vlahutin told RFE/RL.

Scandal And Struggle Over Anaklia

Georgia’s strategic location on the eastern edge of the Black Sea has made it particularly crucial for the Middle Corridor to take off and has pushed connectivity to the top of the country’s foreign policy agenda.

But the country has a dearth of high-quality infrastructure that has so far held back its transit potential, with long lines of trucks at its borders and ports at Batumi and Poti operating near capacity as trade along the route has steadily increased since 2022.

This has led to organizations like the European Bank for Reconstruction and Development and the World Bank warning that without a deep-sea port in Georgia -- which would allow larger ships to transport increased volumes at a more efficient rate -- neither the country nor the Middle Corridor will be competitive as a global trade route.

Against this backdrop, the Georgian government began talking about reviving the project in 2022. Prime Minister Irakli Garibashvili, who returned to office in 2021 for his second stint as head of government, said that building the port in Anaklia is his government’s “main and ambitious priority” and opened a call for bidders on a new iteration of the project earlier this year, saying the government would retain a 51 percent stake.

The move caught some observers by surprise given that a previous attempt by a consortium between Georgia’s TBC Bank and U.S.-based Conti International to build a deep-sea port in Anaklia was canceled by the government in 2020 after being mired in controversy for years.

The consortium was founded in 2017 by a banker-turned-opposition politician Mamuka Khazaradze, who set up the Lelo for Georgia in 2019. Shortly after that, money laundering charges were brought against him and his partner, Badri Japaridze, who co-founded TBC -- Georgia's biggest bank -- with Khazaradze.

Following the charges, the American investor pulled out and the project ground to a halt until the government canceled the $2.5 billion port contract. In 2022, a court found Khazaradze and Japaridze guilty of fraud, but they were both released without prison time.

Khazaradze has claimed the authorities were trying to sabotage the project and that the real issue behind the dispute is his personal conflict with Bidzina Ivanishvili, the billionaire former prime minister who leads the Georgian Dream party that has been in power since 2012.

Speculation also spread in Georgian media that Russia had pressured Tbilisi to end the venture as Moscow would not welcome a port backed by a U.S. company on the Black Sea or one that would compete with its own port further north in Novorossiisk.

Khazaradze declined RFE/RL’s interview request but is currently taking the government to an arbitration court in London over what he maintains were politically motivated charges to derail the port. He’s been an outspoken critic of the project’s revival and believes it is unlikely to attract sufficient investment given the legal roadblocks his case could bring against it and the government’s desire to hold a 51 percent stake in the port.

Who Will Build Anaklia’s Port?

Despite this unfolding controversy, the bidding process for the Anaklia project is under way.

The deadline for proposals passed in June and they are currently being reviewed, David Javakhadze, the director of the LEPL Anaklia Deep Sea Port Development Agency within Georgia’s Economy and Sustainable Development Ministry, told RFE/RL.

“Several international companies have expressed their interest toward the project, including a consortium consisting of several companies,” Javakhadze said in e-mailed comments that did not say which companies submitted bids.

Once selected, the deep-sea port would take years to be completed and likely cost billions of dollars. In the meantime, attention is focused on which companies -- and their country of origin -- will be selected.

Chinese firms are particularly emerging as potential bidders. Chinese companies had previously approached Khazaradze’s consortium about building the port and interest in Georgia has only grown since the disruption to reliable trade routes due to the war in Ukraine. During an interview in late 2022, Zhou Qian, China’s ambassador to Tbilisi, said Anaklia was important for the success of the Middle Corridor and that the embassy would encourage Chinese firms to place bids.

Tbilisi’s interest in China appears to be growing, too, with Garibashvili upgrading Georgia’s ties with Beijing to a strategic partnership during a July trip to Chengdu -- a development that has only added to speculation that a Chinese-led bid could be chosen to build the port.

Doing so could come with fallout for Tbilisi’s relations with Brussels, especially as it awaits the EU’s decision in December on its bid for membership-candidate status.

Tbilisi’s relationship with Brussels and Washington has become strained in recent years amid increased anti-Western rhetoric, concerns over the rule of law, the government’s neutral stance toward the Ukraine war, deepening relations with Russia, and democratic backsliding by the ruling Georgian Dream party.

In February, the government tried to pass a controversial “foreign agents” bill that copied a similar law infamously introduced in Russia in 2012 that branded media, NGOs, individuals, and other civil society organizations that receive more than 20 percent of their funding from foreign sources as “agents of foreign influence.” The government backed down and withdrew the bill in March following sustained street protests and international condemnation, with Brussels saying that it was incompatible with EU values.

SEE ALSO:

Why The Georgian Government Climbed Down On The 'Foreign Agents' Law

Similar concerns were raised in May about warming ties with Moscow when the Kremlin unexpectedly abolished visas for Georgian nationals and lifted a flight ban unilaterally imposed in 2019 after a wave of anti-Kremlin protests in Georgia.

In response, the government resumed direct flights with Russia despite relations being rocky since Moscow invaded Georgia in 2008, with Tbilisi losing control of two Russian-backed separatist regions. EU spokesman Peter Stano told reporters following the move that it raised “concerns about Georgia’s EU path.”

Asuncion Sanchez Ruiz, deputy head of mission of the EU delegation to Georgia, says a similar litmus test will come in choosing the winning bid for the Anaklia deep-sea port. The project has been selected within Global Gateway, Brussel’s infrastructure financing answer to China’s BRI, and she says that the EU has a strong preference to see European firms involved in the port.

“Georgia has applied to the EU and whoever the final investor is, we need to make sure that it’s in line with the [EU-Georgia] Association Agreement,” Sanchez Ruiz told RFE/RL during an interview in Tbilisi, referring to the 2016 deal that grants Georgia access to some sectors of the European Single Market as well as visa-free travel to the bloc.

“If what is chosen is not in-line with the EU -- a club that Georgia wants to join -- then that should help tell us about the direction this government is heading towards,” she said.

Big Hopes And Shattered Dreams

Amid the palm trees that dot Anaklia and the boardwalk that was meant to showcase it as a seaside destination, the marks of the aborted attempt to build Georgia’s first deep-sea port can still be seen in the town.

Maya Svanidze, a 60-year-old resident of Anaklia who operates a guest house for summer tourists, remembers the optimism that took the town as promises of new jobs and development were attached to the ambitious project.

Like many residents on Anaklia’s southwestern edge, she was offered a government payout to sell her home to make room for the operational grounds of the port. Svanidze accepted the money, which she said was enough to relocate and buy a new house just a few minutes away. She moved there with her family in 2018.

As ground was broken, mountains of earth and sand were moved and piled up within the new sprawling, fenced-off construction site. Then it all stopped -- but the sand stayed.

The sand has since become a major nuisance for locals, with regular gusts of wind from the sea spreading it into houses, drains, and cars for those who live nearby. Svanidze and others have raised the issue with officials, but the piles of sand have remained.

“I would be happy to see this port get built and this sand and dust finally be gone,” Svanidze told RFE/RL. “But things have been promised before and they don’t always come about. So, I’ll believe it when I see it.”

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Meanwhile, the Anaklia project is also facing competition from Poti, the country’s largest port that currently serves as the main hub for Georgia’s international trade.

APM Terminals, the Netherlands-based operator of the port in Poti, announced plans to double its capacity and allow for bigger ships to enter.

It is currently in the final stages of talks with the government on the expansion, which could upgrade Poti’s capacity and help unclog the current shipping bottleneck, though its narrow entrance could still limit the amount of ships compared to the plans for Anaklia.

APM Terminals did not respond to RFE/RL’s request for comment.

Roman Gotsiridze, an opposition lawmaker with the United National Movement, says it's unclear if Georgia would need both projects, even with the uptick in trade across the Middle Corridor.

That’s why, he says, his focus of the last several months has been in trying to get answers from the government over the Anaklia project and to push for a formal investigation for more details on the plans to be revealed.

But those efforts have not yielded much. He says the government has been reluctant to answer the opposition’s questions about the port and in some cases has turned to loopholes to avoid appearing in parliament or simply not turned up for the constitutionally mandated question period.

In the meantime, he says he will be watching the tender process closely to see what kind of bids get put forward.

“My concern is that a bid from a Western country won’t be chosen and instead it will be from a country that can reach some sort of agreement with Russia,” Gotsiridze told RFE/RL.

“China, a [Persian] Gulf country, or a combination of them together are all possibilities.”

Written and reported by Reid Standish. Photos and reporting by Tamuna Chkareuli

Welcome back to the China In Eurasia briefing, an RFE/RL newsletter tracking China's resurgent influence from Eastern Europe to Central Asia.

I'm RFE/RL correspondent Reid Standish and here's what I'm following right now.

The Wider Strategy Behind China's Ukraine Diplomacy

China joined international diplomatic talks in Saudi Arabia on August 6 for a two-day summit with officials from 40 countries designed to find a framework for peace in Ukraine. But does it signal a new tack for Beijing?

Finding Perspective: China sent its special envoy for Eurasian affairs, Li Hui, who offered support for the summit and called for another round of talks through the format that includes countries from the West and across the Global South.

The summit -- which also included representatives from the European Union, India, and the United States -- excluded Russia and centered upon putting momentum behind a 10-point peace formula developed by Ukrainian President Volodymyr Zelenskiy.

Several observers saw China's presence as a sign that it was willing to play a more constructive role in pushing for peace talks, but there's plenty of signals that show Beijing is playing its own game here.

China unveiled its own 12-point peace document in February and Alexander Gabuev, the director of the Carnegie Russia Eurasia Center, was skeptical that Beijing was changing its stance on the war, arguing that while the economic and reputational costs for standing by Russia are rising, the longer term strategic calculations of keeping Russia by its side remain the same for China.

This was reaffirmed when Foreign Minister Wang Yi spoke with his Russian counterpart, Sergei Lavrov, on August 8 and assured him that China hadn't wavered on its partnership with Moscow.

Why It Matters: China is hoping that it can use its diplomatic track record and openness to dialogue on Ukraine to cement its status as the Global South's superpower and showcase its leadership credentials in the process.

Mark Leonard, the director of the European Council on Foreign Relations, wrote in a recent article for Politico that think tankers and policymakers in China are focused on appearing constructive around ending the war while at the same time ensuring that Moscow will continue to stand by Beijing in rewriting the Western-led world order.

The focal point for establishing this new non-Western order are the so-called "nonaligned" countries across Africa, the Middle East, and elsewhere in the Global South -- many of the same ones that were in Saudi Arabia over the weekend.

Beijing has invested tens of billions of dollars over the last decade in boosting its global image and it has so far yielded mixed results, according to a series of new polls.

A recent Pew Research poll found that two-thirds of respondents from the 24 countries surveyed viewed China unfavorably, while only 28 percent held a favorable opinion. Anti-China sentiment has also reached new highs in Argentina, India, and Brazil, according to the poll.

But there are important divisions here. The majority of the countries surveyed were Western, with African countries like Kenya, Nigeria, and South Africa showing much more favorable views of China in comparison.

While souring public opinion in the West and countries like India marks its own type of foreign policy failure for China, the story is different in Africa and the Middle East.

Public opinion polls by Afrobaromter and Arab Barometer, show that majorities in Africa and the Middle East tend to view China favorably -- although, the Afrobarometer data found that both China and the United States were slipping in recent years as competition between them accelerates.

These global divisions and the larger battle for hearts and minds have now carried over to the diplomatic stage around Ukraine.

Expert Corner: Georgia Gets Closer To China

Readers asked: "Georgia signed a strategic partnership agreement with China on July 27. How major of a step towards China is this for the Georgian government?"

To find out more, I asked Emil Avdaliani, a China expert and professor at Tbilisi's European University:

"This is yet another sign that Georgia is pursuing a multivector foreign policy. Focus on the West will remain in place, but ties with other powers will be developed further. Whether this would bring meaningful results will depend on the war in Ukraine and especially the elections in Georgia slated for 2024.

"The agreement between Tbilisi and Beijing could also be regarded as a bargaining chip for Tbilisi's rather complicated relations with the West. The calculus could be that amid Brussels' upcoming decision on whether to grant Georgia an EU candidate status, Tbilisi might be raising the stakes by advancing its ties with big Eurasian actors like China.

"I think the Georgian public slightly overreacted to the agreement between China and Georgia when it was announced. It's unclear what the document would bring in practical terms. For China, Georgia is a rather small market and the only real value the country holds for Beijing is its geographic location and the growing realization to advance the Middle Corridor trade route. Moreover, China could also be eyeing greater engagement with the Black Sea region, where major geopolitical competition is unfolding between Russia and the West."

Do you have a question about China's growing footprint in Eurasia? Send it to me at StandishR@rferl.org or reply directly to this e-mail and I'll get it answered by leading experts and policymakers.

Three More Stories From Eurasia

1. A Belt And Road Summit This October

After a three-year hiatus due to strict COVID restrictions, Chinese leader Xi Jinping is planning to host a high-profile summit for his signature Belt and Road Initiative (BRI) -- although there are early signs that it won't receive the top billing Beijing is hoping for.

What It Means: The most prominent guest to RSVP for this October's Belt and Road Forum -- the first such gathering since 2019 -- is Russian President Vladimir Putin, something The Wall Street Journal reports is causing European leaders to want to keep their distance.

The BRI -- China's mammoth overseas infrastructure push that gained steam in the mid-2010s -- has been the subject of some belt tightening in recent years and seen its reputation fall amid stalling projects, governments struggling to repay loans, and allegations of corruption and overspending.

High-level European leaders like French President Emmanuel Macron and German Chancellor Olaf Scholz currently have no plans to attend the forum in Beijing -- which will be the third BRI summit since the inaugural one in 2017 -- and Italian Prime Minister Giorgia Meloni has said she plans to pull her country out of the BRI altogether.

Other countries like the Czech Republic and Greece, both of which signed up for the initiative and were among some of Europe's more enthusiastic participants, currently do not plan to send senior officials for the BRI forum.

The BRI has been at the center of Beijing's efforts to boost international development and expand its global influence and the guest list for this year's upcoming gathering will be an important litmus test for the strength of China's economic diplomacy under Xi.

No confirmed date has been set for the summit, but Chinese officials are reportedly eying mid-October.

2. Kyrgyzstan Turns To China For Hydropower Help

Kyrgyzstan, which is in the midst of a yearslong energy crisis, announced that it signed a memorandum of understanding and an investment agreement with a consortium of Chinese companies on July 27 to build a new hydropower plant that could help with the growing energy shortages, my colleague Toktosun Shambetov from RFE/RL's Kyrgyz Service reported.

What You Need To Know: Few details were revealed about the newly inked project, which will consist of a cascade of multiple hydropower plants (HPPs) in succession near Kazarman in the country's Jalalabad Province.

But according to an announcement by the Kyrgyz cabinet of ministers, it's tentatively estimated to cost between $2.4 billion-$3 billion, making it one of the country's most ambitious hydropower ventures.

Akylbek Japarov, the chairman of the Kyrgyz cabinet of ministers, said the project was a game changer that wouldn't only help erase the Central Asian country's energy deficit, but also turn it into an energy exporter.

That would be a welcome achievement for the government, which announced a three-year energy emergency on August 1 due to widespread electricity shortages.

There are still concerns over whether the project will come to fruition, with multiple experts telling Toktosun that the government's poor record in actually delivering large-scale infrastructure is spotty at best, with many projects grappling with corruption, delays, or being abandoned altogether.

3. How Serbia Become Blanketed In Chinese-Made Surveillance Cameras

A quiet expansion of Chinese-made surveillance cameras has spread across Serbia in the last five years, with some towns and villages having one camera for every 100 inhabitants.

My colleague Natalija Jovanovic from RFE/RL's Balkan Service traveled across the country and investigated the shadowy company behind the spread of the technology. Read her report here.

The Details: Belgrade's expansion of Huawei surveillance cameras -- many of which have facial-recognition capabilities -- was the center of an RFE/RL investigation last year, but the countrywide growth has received little attention inside and outside the country.

Natalija's monthslong investigation found that the spread has taken place with little public consultation or disclosed information from the authorities.

The report also found that 42 local governments surveyed have awarded their contracts exclusively to Macchina Security, a shadowy Serbian company increasingly active on the security goods and services market that has been winning tenders and importing Chinese-made surveillance technology into the country in recent years.

Check out Natalija's investigation here.

Across The Supercontinent

Homebody: According to a Bloomberg News analysis, Xi, who made an average of 14 overseas trips per year from 2013 to 2019, has only spent two days outside China this year and has not supplemented the foreign trips with video calls. Instead, Xi is making foreign dignitaries come to him and has met with representatives from 36 countries so far in 2023.

Willkommen: TSMC, the world's largest contract chipmaker based in Taiwan, has agreed to build a 10 billion-euro ($10.9 billion) plant in Dresden, Germany, in partnership with Infineon Technologies AG, NXP Semiconductors NV, and Robert Bosch GmbH. 5 billion euros ($5.49 billion) will come from the German government as subsidies to support construction of the factory.

Seaside Power Politics: The Chinese Communist Party has begun its annual summer retreat in Beidaihe. The gathering is usually a chance for party members to gather and speak candidly about issues concerning its leadership and comes amid growing tensions over the economy and the unexplained disappearance of Qin Gang, who was China's foreign minister.

Steel Partners: A delegation of lawmakers from the ruling Serbian Progressive Party traveled to China in late July, where they reaffirmed their support for the Chinese Communist Party's political model and held talks over the status of Kosovo, my colleague Nevena Bogdanovic from RFE/RL's Balkan Service reports.

CPEC Turns 10: Late July marked the 10th anniversary of the China-Pakistan Economic Corridor (CPEC), Beijing's flagship project within the BRI. CPEC has had no shortage of controversy and setbacks in those years, while still forging ahead with investment and deeper ties.

The Lowy Institute published a scorecard for CPEC that concludes that it may have been unrealistic from its inception. Take a look here.

One Thing To Watch

With China's economy performing below expectations, Chinese authorities are putting pressure on prominent local economists to avoid discussing negative trends, such as deflation.

Multiple local brokerage analysts and researchers at leading universities as well as state-run think tanks have told Western media that they have been instructed by regulators, their employers and even domestic media to avoid speaking negatively about topics ranging from fears of capital flight to softening prices.

Market analysts say the growing self-censorship among economic-research professionals will have deepening knock-on effects and attach further questions to how reliable local Chinese data is for investors.

That's all from me for now. Don't forget to send me any questions, comments, or tips that you might have.

Until next time,

Reid Standish

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