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Dr. Burcu Gültekin Punsmann Senior Foreign Policy Analyst TEPAV
TEPAV’s Background Papers Collection aims to generate data and provide substance and insights to on-going policy and public debates in and around Turkey. This background paper is analyzing processes and dynamics from local and regional perspectives in a defined timeframe. It looks back on how Turkey’s private sector rediscovered the Caucasian neighbourhood forgotten behind the Iron Curtain. The infrastructure put in place in the early period of the post Cold War context will shed light to the prospects and constraints for furthering the cross-border cooperation and determine the challenges ahead.
This Background Paper was supported by the German Marshall Fund of United States (GMF). The views expressed here are those of the author and do not necessarily represent the views of GMF.
1. Introduction The break-up of the Soviet Union had far-reaching consequences for Turkey’s immediate neighbourhood. Turkey discovered a new world in her vicinity that had remained separated by what might be called the ‘Oriental’ Iron Curtain.i Along with Norway, Turkey was one of NATO’s only two flanking states to share a land border with the USSR. The 600 km Turkish-Soviet border was a major cause of concern in terms of national security. Russia’s ‘enemy image’, which long pre-dated the Cold War, had overwhelming importance in military and intelligence circles. Before becoming the official frontier in 1921, however, the Transcaucasus had been the contact zone between the Ottoman and the Russian empires, a violent contact since the two empires had fought more than traded over the centuries. There have been sixteen Russo-Turkish wars and most involved military operations in eastern Anatolia and the Caucasus. The Transcaucasus, a grey area between two powerful political rivals, acted as a buffer zone. In the early 1990s, the days of Turkey sharing a land border with the USSR ended and it discovered three new neighbours. The end of the bipolar order allowed Turkey to redefine her crossborder relations and regain access to the former southern underbelly of the USSR. The post-Cold War context radically changed political data in the region and modified the scheme of Turkey’s border exchanges. The closure of the border with Armenia and the opening of border crossings with Georgia and Nakhitchevan are the most significant events. The involvement of the Turkish private sector in the region dates back to the early 1990s, the time of South Caucasian republics’ accession to independence. Turkish business activities range from purely commercial transactions to major infrastructure projects, but Turkish businessmen can also be credited with bringing private entrepreneurship to the region. Willing to operate at high levels of risk, Turkish businesses sustained the flow of essential products and ensured logistics during the various conflicts in the South Caucasus. Turkish firms are involved in every aspect of their economies and, distinct from other foreign companies, are not restricted to a particular sector protected by state guarantees. In addition to their core activities, some - especially in Azerbaijan – have invested in philanthropic activities and are helping to foster dialogue on policy issues and the institution-building process. Turkey is the premier foreign investor in the non-oil sector in Azerbaijan and Turkish businesses have pioneered the services and distribution sectors. They have shaped the city of Baku and contributed to the abolition of the Soviet era by accelerating the transition to a market economy. New buildings, restaurants and shops, designed, financed, built and sometimes owned by Turkish companies, transformed Baku’s appearance and provided it with the external signs of modernity. Despite the lack of diplomatic links, Turkey is also a major supplier for the Armenian economy. Businessmen from both countries claim to ‘talk about trade without talking about politics’, and advocate that deeds and perceptions should be shaped by facts, not rhetoric, and that priority should be given to the establishment of commercial ties. Relations with Turkey are highly valued in political and economic circles in Georgia and there are grounds for arguing that the country owes its independence to Turkey. Proximity to Turkey allowed Georgia to diversify its external links after the severe disintegration of its former trading pattern. The opening of the Sarp/Batumi border gate had a tremendous
Ardahan and Batumi. Persia. Armenia and Nakhitchevan form a unique logistical hub in the South Caucasus because they are at the crossroads of east-west and north-south communications. Mesopotamia. As a result.impact on Georgia’s foreign economic relations and gave it a window on the world outside. commercially viable and strategically beneficial east-west railway that will ensure a direct link between Turkey. became an operational centre for Ottoman forces. an Ottoman province since the second half of the 17th century. Turkey and Russia fought eight wars over the basic theme of a common border in the Transcaucasus. In World War I. By combining with the Bolsheviks over the Caucasian isthmus. After Russia defeated Turkey in the 1768-1774 war. Foremost in his calculations was the need to eliminate the Caucasian barrier between Russia and Turkey. which delineated the Soviet–Turkish border. At the Congress of Berlin in 1878. and open Armenia and Nakhitchevan to international trade and investment. and stymied an 3 . He considered the Caucasus front crucial to turning the war around and rescuing Turkey from an irreparable Allied-imposed peace. 2. The development of transport routes across the Transcaucasus to Turkey will support the integration of production and distribution networks. An Anatolia-CaucasusCaspian route would add a cost-effective. gave birth to 70 years of relative stability. the founder of modern Turkey. the Ottomans were forced to sign the treaty of Kuçuk Kaynarca. The Moscow Treaty of 1921. Mustafa Kemal Atatürk. The development of regional integration strategies that strengthen links between Anatolia and the South Caucasus would be a major step toward boosting intra-regional trade and access to world markets. Afghanistan and India. a pattern that radically altered in the 1770s after Russia’s expansion in the Black Sea region. looked to Soviet Russia as an effective counterbalance to the Allied powers. The port of Batumi. the Ottoman Empire ceded to Russian the districts of Kars.ii Consequently. Baku and the Caspian region. this struggle was a continuing march of glory from 1768 to 1878. For most of the 18 th century. and the only east-west route through South Caucasus to Central Asia. and lead to the implementation of projects that accelerate regional integration. For Russia. but its strategic importance to Russia remained low until the Crimea War (1853-1856). Atatürk hoped to open the floodgates to Anatolia. navigation rights in the Black Sea and what was interpreted as a right of protection over Ottoman subjects of Orthodox faith. Sarp/Batumi is the only operational land border between Turkey and the Caucasus and Caspian regions. which gave Russia a foothold on the northern shores of the Black Sea. Russia replaced Austria as Turkey’s most immediate threat. Syria. The alignment of the common border resulted from an entente between Turkish nationalists and the Bolshevik regime during World War I. called to revise the terms of the Russian-Turkish peace treaty of San Stefano earlier that year. The eastern border The border in the context of Turkish-Soviet relations Between the 17th and 20th centuries. as well as losing an important part of its Balkan territories. the arrival of a Red Army cavalry battalion in Nakhitchevan in July 1920 was greeted enthusiastically in the Grand National Assembly since the linkage of Soviet and Turkish detachments opened a passage through Bayazit to Azerbaijan. the Ottoman empire’s chief adversary was Austria and its main ally France.
Armenian drive to recapture the lower Araxes river valley and lines of communication and transportation that reached to Persia. In a 1967 agreement. with the provision that it could not be transferred to another party (Armenia) without Turkey’s express consent. In 1972 and 1978. together with other major concessions. the Russian Soviet Federated Socialist Republic accepted responsibility for securing the confirmation of Armenia and the other governments in Transcaucasus. was constituted as an autonomous district (oblast) of Soviet Azerbaijan. signed on 17 December 1925. in the Treaty of Lausanne in 1923. By the end of the 1980s. particularly in the field of economics. Though the Soviet Armenian government initiated steps to incorporate ‘Mountainous Karabagh’. Just before the end of World War II. which also demanded the abrogation of the Montreux Convention of 1936 – which confirmed Turkey’s right to exclude warships from the Dardanelles and Bosporus in time of war – and exclusive cooperation with Turkey for the defence of the Straits. Turkey would ultimately gain Allied recognition of these boundaries. Communist Russia and Kemalist Turkey cooperated after World War I to defend their independence. The USSR assisted the young Turkish republic in its industrialisation and the basis of its textile industry was established due to a Soviet credit. on 19 March 1945. A natural gas agreement in 1984 boosted bilateral trade on the basis of a clearing agreement between the two countries. much reduced territories and the stability of their new regimes from the Western powers.v After centuries of antagonism between Tsarist Russia and the Ottoman empire.vii A set of agreements signed at the end of the 1960s prepared the ground for an era of rapprochement. while Turkish traders were allowed use of the port of Batumi. Moreover. but not all of the region. Turkey received outright all the territories exacted in the Treaty of Alexandropol. a pledge fulfilled in the Treaty of Kars on 13 October 1921 between Turkey and the Soviet republics of Azerbaijan. A bilateral economic agreement signed two years later granted preferential treatment to the each other’s economic representatives. This cooperation ripened into a friendship pact enhanced by a treaty of neutrality and nonaggression. the Soviet Union denounced the friendship treaty of 1925 and its policy towards Turkey became increasingly menacing. Turkey signed its first reciprocal economic agreement with the USSR. further facilitating the transit trade.iii Under the Treaty of Moscow on 16 March 1921. a measure condoned in both Baku and Moscow. USSR supplied Turkey with equipment and technical assistance to build several industrial plants. 4 . Georgia and Armenia laid claims to Turkish territories with the encouragement of Moscow. moves to open the Sarp/Sarpi border crossing were symbolic of a warming in Turkish-Soviet relations that amounted to glasnost.iv Sharur-Nakhitchevan became an autonomous region under the juridiction of Soviet Azerbaijan.vi Relations improved in the 1960s after Moscow renounced its territorial claims. Under a 1932 agreement the Soviet Union granted Turkey an $8 million credit for the import of manufactured goods and industrial equipment. the two states signed a declaration of ‘principles of good-neighbourly relations’ and a ‘political document’ on friendly relations. Armenia and Georgia. the decision was reversed in mid-1921 with the result that most.
Turkey had to deal with new neighbours. they all closed except the Turkish consulate. With the dissolution of the Soviet Union and the independence of the Caucasian states. years before another more tangible concrete wall divided Berlin. The border villages of Sarpi and Gogno were part of the restricted zone. important land forces and the naval air service. Residents of these villages as well needed the propiska to travel even inside Adjaria and be allowed afterwards to go back home. it was sealed by a barbed-wire fence and the local leaders of Turkish origin were sent to Siberia. after an uprising on the Soviet side. villagers had to make an arduous twoday journey through the Dogu Kapi border crossing. There is now only one legal crosspoint at Kars. there were 20 consulates in Batumi. 3. Ukraine has just transferred its consulate from Poti to Batumi. One needed a special permission – a propiska to be allowed to enter the area. To visit one other. The demarcation of the Turkish-Soviet border in the 1920s ran through the village of Sarp/Sarpi. The opening of Dilucu crossing in 1993 created links between Iğdır 5 . Villagers had to travel via Moscow to attend funerals at the other side of the curtain. and a railway connection between the two facilitated commercial traffic between the USSR and Turkey. Till 1988. Georgia. the only official border crossing between Turkey and USSR. The Dilucu border crossing between Turkey and Nakhitchevan was closed in 1921. Sarpi was considered as the most sensitive border of the USSR.The impact of the Turkish-Soviet border on border communities Doğu Kapı. The 18 km land border between Turkey and Azerbaijan had been closed since 1921. dates back to 1927. A navy academia. The closure of its only border crossing with Armenia in 1993 and the opening of new border posts with Georgia and Nakhitchevan are the most significant events in the early 1990s. opened as soon as 1920. were the important components of the Soviet defense system facing the third Turkish army. never closed. In 1919. Turkey ‘discovered’ her new neighbour. It used to take two to three months to send a letter from Sarp to Sarpi. It was neighboring Turkey and NATO. a separation so hermetic that the population of Nakhitchevan was reportedly unaware that their close neighbours spoke nearly the same language: the population of Sadarak only noticed their neighbours spoke the same language in the 1970s when they first received broadcasts from Turkish television. if permission was granted. The Turkish Consulate in Batumi. the opening of a second gate at Türkgözü and a 1994 measure that granted Ardahan the status of border city. 150 miles south to here. Sarp’s division through the demarcation of the border during the founding of the Turkish republic in the 1920’s was cemented for its 900 strong population – 600 villagers live on the Turkish side. all countries conducted their consular affairs from Moscow. The rediscovery of the neighbours The post-Cold War context radically altered the scheme of border exchanges. with the opening of Sarp border gate in 1988. and has been therefore the second country which is represented in Batumi. The border gate is situated some 20km from the Turkish city of Kars and the Armenian city of Gyumri. based in Batumi. This very fact highlights the specificity of Turkish-Soviet relations and the impact of the geographical proximity. Peasants could freely cross the border to tend their farms or visit relatives until 1937 when. was the Soviet gateway to the Black Sea and to the warmer seas.
Otar Tcherkezia. 1994 Since the fall of the Soviet Empire. Ekrem Pakdemirli. a total of 146. The Turkish minister of transports. Georgians had a greater cultural proximity with Turks in comparison to other USSR citizens. sealed since 1937. Two daily ferry connections with Sochi and ten charter flights 6 . (AFP) AFP – December. Trébizonde.000 people crossed into Turkey. were penniless. Commercial flows. September. the reopening of the border post is the effect of the policy of perestroïka carried out by Mikhaïl Gorbatchev. restarted. dependent on Sarp. though some came to visit relatives separated since the early years of the 20th century.and the Azeri enclave of Nakhitchevan. 2nd 1988 Reopening of the border post between Turkey and the Soviet Union The border post Sarp/Sarpi. the Soviet-Turkish border post. Initially at USD 500 million.5 billion. Turkey : « Russians » from Trebizond Le Figaro. At the beginning. The agreement of 1984 on natural gas supplies in exchange of mainly Turkish foodstuff boosted the Turkish-Soviet trade. had lobbied hard over the issue. Beyond any doubt. Claude Lorieux. They were selling off their family belongings. A 12 km long bridge was built to ensure the linkage between the two sides of the river. It was the era of Russian bazar. stressed that its opening would boost trade and tourism between the countries. According to the governor of Kars. M. which have been paralyzed. 31st. Official delegations of both countries attended the opening ceremony. the old Byzantin capital has become one of the major commercial gates of the Caucasus. at the gates of the former Soviet Empire. since the fall of the iron curtain. The Adjarians still remember the 17 km long queue starting from the Gogno Fortress to Sarpi. Opening of the Sarpi border crossing Le Monde. connecting Turkey to the Soviet Union. opened on August. has become. preparations for the opening in 1991 of a border post between Turkey and Nakhitchevan have been speeded up. Russians (naming for all residents of the former USSR) coming to Trebizond. 31st. According to the Prime Minister of the Socialist Republic of Georgia. border city with the USSR. The Adjarians noticed that Turks were paying special attention to Georgians in the queue lines. Today. 5th 1990 The detente between Moscow and Ankara revealed by the visit to Moscow of the Turkish Prime Minister in 1988 led to the reopening of the border posts. convinced that the closure of the border post in 1937 was a mistake. The early times of the border crossing gave birth to deep human stories but very soon the need for economic survival shadowed the emotions of reunions. Sarp was also gateway to the other South Caucasian republics. The opening of the frontier at Sarp was warmly anticipated by officials and business people on the Black Sea coast and the Trabzon Chamber of Commerce. The opening of the Sarpi border crossing in 1988 was an historical event. Russians were selling without buying anything. in particular. December. people all over the Soviet Union gathering to Batumi to go into Turkey. Ardahan and Iğdır to trade with their new neighbours. In 1990. the bilateral trade turnover is expected to reach in 1990 USD 1. the trade flow has been reversed. become currently the Turkish-Georgian border post. mostly to trade or to shop. A Council of Ministers decision in the early 1990s permitted the provinces of Artvin. This border post near Aralik will become the third border crossing between Turkey and the Soviet Union to open since the warming up of East-West relations.
In March. by recognizing all the other states of the ex-USSR on 19 December. has 39 bank agencies and 22 exchange offices. 20th. deputy premier in the outgoing Yilmaz administration. today. in particular the expansion of the port of Trabzon to serve the transit trade with Armenia. has got since the beginning of the year custom services. Trebizond. Apparently. was postponed. issued on January. when the Turkish ambassador in Moscow. The « Vali » (governor) shows a bilingual textbook for Russian businessmen. There was much discussion of the development of trade between the two countries. According to his assessment. about a million visitors from the former USSR come to the city. the Turkish government retaliated by halting the supply of wheat across Turkish territory to Armenia. it appeared likely that Turkey might be able to develop good relations with both Armenia and Azerbaijan. there was widespread sympathy for the Azeri in Turkey. Between autumn 1991 and the spring 1992. but it ran into a cul-de-sac. a high level delegation from Armenia was received by Ekrem Pakdemirli.are linking Trebizond and the former USSR. Kars – historically known as Serhat Karsviii – had lost its status as a border city. traditionally very conservative. However. The population. The Yilmaz government decided to take the risk of recognizing the independence of all the ex-Soviet states before the US and other western powers made the same decision: one of its last acts.the Turkish-Armenian fence as an Oriental Iron Curtain In the meantime. since the Turco-Soviet treaty of 1921 had specifically stated that it “shall form an 7 . 1991. The fighting in Nakhitchevan had particular serious implications for Turkey. Azerbaijan and Kazakhstan as well as Moscow. The following month saw the first visit ever by a senior Turkish official to Armenia.when Soviet forces entered Baku following attacks on the Armenian minority and several hundred Azeri demonstrators were killed. President Turgut Ozal visited Ukraine. 1991. the government adopted a very cautious approach. Turkey’s renewed concern for the future of South Caucasus began in January. 1992. close to the frontier with Turkey. has been evolving with contacts with visitors from the Caucasus. At the popular level. insisting that the events in Azerbaijan were purely an internal Soviet affair and refusing to recognize Azerbaijan’s abortive declaration of independence. before leaving office was to recognize Azerbaijan on 9 November. After the official closure of Doğu Kapı/Akhourian in 1993. Signs of the stores are often being translated into Russian. However not complete. direct land communications with Armenia were severed and a proposal to open a second gate at Alican/Makara. after Armenian forces attacked Kelbajar. The turnover of the port has increased by four times in a year. The incoming Demirel government followed this lead. near Iğdır. Armenian forces attacked the western end of the Azeri enclave of Nakhitchevan. which was proposed by an AmericanArmenian-Turkish consortium in February. 57 companies are based in the new free zone area of the port.. 1990.. Turkey was urging Azerbaijan to reconsider the revocation of Nagorno-Karabagh’s autonomy in a bid to diffuse the dispute. Volkan Vural came to Yerevan to discuss the improvement of bilateral relations. On 3 April. Following ambassador Vural’s visit to Yerevan. The small airport with its runway along the Black Sea coast. and regular flights started between Istanbul and Baku. 4. The opening of Dilucu border post between Iğdır and Nakhitchevan in May 1992 was of vital importance to the isolated Azerbaijani enclave.
the Turkish government retaliated by stopping the supply of wheat across the Turkish territory to Armenia by sealing the Turkish-Armenian border post. 18th 1993. On August. On December 8th . Mr Arpaslan Türkes aimed to prepare the ground for future relations. The Turks also made moves to relieve Armenia’s chronic economic plight. The Turkish commander of Land Forces. and Armenia’s refusal to do so. Petrossian’s presence at the meetings of heads of state of the BSEC in Istanbul was taken as a further sign of his wish to improve relations with Turkey. pointing out the advantages which Armenia could derive from regular political and economic links with Turkey. General Muhittin Fisunoglu announced that “all necessary preparations” had been made. after he delivered an outspoken anti-Turkish speech to a meeting of foreign ministers of the Council of Europe. Turkish Prime Minister . Turkish troups on Armenian border are on alert. 28.Tansu Ciller asked the Parliament to allow to mobilize troups in case Armenia attacked Nahkitchevan. Turkish 8 . 1993: Armenian forces launched a new offensive to establish a second corridor between Armenia and Nagorno-Karabakh through the town of Kelbajar. Failure in Establishing diplomatic relations Turkey’s demand for Armenia’s official recognition of the Turkish-Armenian border in the early 1990s. On 3 April 1993. Turkey agreed to deliver 100. In November 1992. Turkey established diplomatic relations with Azerbaijan and Georgia in 1992. MHP. The last moved provoked protests in Azerbaijan. He dismissed his foreign minister Raffi Hovanissian. Since closing the border was retaliation for Armenia’s occupation of Azerbaijani territory. a decision that also ended direct communication between the two countries.000 tons of wheat to Armenia (the cost of which was to be borne by the EC) and to supply urgently needed electricity via a grid connecting the two countries. ending the decade-long. causing a new flood of Azeri refugees. following the Armenian attack against the Azerbaijani city of Kelbajar. The closure of the Turkish-Armenian border On March.during a visit to Baku. it was not this dispute. Armenia considers that its accession to OSCE in the same year proves its alignment with the principle of the immutability of international borders. but the exacerbation of the Nagorno-Karabakh conflict that ultimately led to the closure of the Turkish-Armenian border. Since 3 April 1993. Armenia hasn’t met the Turkish demand to state officially its recognition of the Treaty of Kars of 1921. though the possibility remained that economic ties might be extended if the situation in and around Nagorno-Karabagh improved. Meanwhile Turkey sent a diplomatic mission to Yerevan at the end of August. deputy premier Erdal Inonu was obliged to announce that the electricity deal be cancelled. but emphasizing that this would depend on a peaceful settlement of the Nagorno-Karabagh dispute. However. and that the army was awaiting orders from Ankara to act: a strongly worded statement from the government also accused Armenia of “aggression and expansionism”.autonomous territory under the protection of Azerbaijan. opening the border and the normalisation of relations depend on Armenia’s compliance with ‘the principles of law and its willingness to solve problems with its neighbours’. which had been aggravated by an economic blockade on the part of Azerbaijan and the coincidental breakdown of transit routes across Georgia. north of Lachin. opening the border has been directly linked to the resolution of the Nagorno-Karabakh issue. on condition that the latter cannot transfer this protectorate to any third state”. According to Turkish perceptions. The meeting of 1993 between President Petrossian and the charismatic leader of the Turkish nationalist party. initially prevented the two states from establishing diplomatic relations.
Gogno is the first Georgian village after Sarpi. and the opening of a second gate at Türkgözü at Posof/Vale in 1994. Turkey ‘discovered’ her new neighbour. Currently three border crossings are enabling Turkey’s communication with its South Caucasian neighbours. the capital of the Autonomous Republic of Adjaria is at 15 km distance from the border crossing. located at the top of a hill. Irony of fate. The trip from Batumi to Akhaltsikhe lasts almost hours. a Turkish Black Sea port. is among the greenest places in Turkey. The Russian military base was located on the road connecting the border post to Batumi. Any shift in this stance raises concerns in Azerbaijan. The politicization of the genocide issue under after Kocharian’s accession to power erected an additional strumbling block to the resumption of Turkish-Armenian ties. The closure of its only border crossing with Armenia in 1993 and the opening of new border posts with Georgia and Nakhitchevan are the most significant events in the early 1990s. the days of Turkey sharing a land border with the USSR ended. In the meantime. located on the Turkish-Armenian border. Border posts impacted tremendously on regional politics. split into two by the Turkish-Georgian border. Turkey had to deal with new neighbours. Artvin. and finally the Akhaltsikhe direction at Khashuri. The village Sarp/Sarpi. This border zone. with the opening of Sarp/Sarpi border gate in 1988. The opening of Dilucu border post was also a long-awaited event. Georgia. perceived as one of the most sensitive external border of the Soviet Union was gathering a high military concentration. the Autonomous Republic of Nakhitchevan. It is running from Black Sea to Dilucu. The opening of Dilucu crossing in 1993 created links between Igdir and the Azeri enclave of Nakhitchevan. For the first time. Traveling along and across the Turkish-Caucasian border In the early 1990s. At the Turkish side. whose main leverage on Armenia is the border issue and which fears any weakening of its own position in the search for a political settlement. Consequently.blockade is inextricably linked to the political settlement of the Nagorno-Karabakh conflict and the liberation of Azerbaijani lands. Batumi. The natural beauty of the region is overwhelming. take to road to Tbilisi. Artvin and Ardahan are the major cities on the road to the second Turkish-Georgian border crossing. direct land communications with Armenia were severed and a proposal to open a second gate at Alican/Makara. After the official closure of Dogu Kapi/Akhourian in 1993. was postponed. the 130 km long road connecting Adjaria and the Samtskhe-Javakheti is unfit for driving. Turkey shares a 276 km long border with Georgia. 9 . between the cities of Kars and Gyumri. One has to travel to Kutaisi. The opening of Sarp/Sarpi has been a harbinger of the end of the Cold War. is located a few kilometers from Hopa. Turks and Azeris have been in direct contact. the eastermost point of Turkey. It is impossible to travel along the border at the Georgian side. 325 km long border with Armenia and a 18 km long border with Azerbaijan. linked by a railway. Azerbaijan presses Turkey to maintain the status quo because the effectiveness of the blockade depends on Armenia being isolated from two directions. The border runs southwards and crosses a very mountainous zone. the Turkish-Armenian border was sealed in the context of an escallation of the Nagorno-Karabagh conflict. The Turkish-Caucasian border stretches over 619 km. With the dissolution of the Soviet Union and the independence of the Caucasian states. two on its border with Georgia and one on its border with Nakhitchevan. near Igdir. the end of the Cold War led to the closure of the offical border crossing between Turkey and the Soviet Union.
One can even find some areas untouched by humans. The last province on the Turkish side is Kars. on Posof-Vale. lost its status of border city and became one of the easternmost provinces in Turkey in 1993 when direct land communications with Armenia were severed and Dogukapi/Akhourian gate. located at 80 km from the Turkish city of Ardahan and 30 km from Akhaltsike the capital of the Samtskhe-Javakheti region. The linkage between the Turkish and Georgian parts was done at Türközü level. 10 . The Arpaçay river separates Armenia and Turkey. The border town of Akyaka. near Igdir. The highest pick is at 2600 km. an ecologist Turkish NGO. On the border. will allow a direct communication between the Armenian capital and Igdir. The last train station on the Turkish side is situated at Akyaka at 13 km from the Armenian border. nuclear plant. just on the opposite shore of the small river. The third border crossing between Georgia and Turkey is to be open near the Cildir lake. Mr Gökyigit is from Artvin and has Georgian origins. The etymological meaning of “Dilucu” is “tip of the tongue” and is the easternmost spot in Turkey. Akhalkalaki is the center of Javakheti and is the spot of the second Russian military base in Georgia. and Turkish government has recently eliminated special regulation normally applied to border zone. The area is open to tourism. The 325 km long Turkish-Armenian border starts at the level of the Cildir lake and extents till Dilucu. respectively at 35 km and 70 km distance from the post. ends at Dilucu. which is also the last station on the Orient Express across Anatolia. Posof-Vale border post. at Karsakhi level on the Georgian side. Between Digor and Tuzluca. and is particularly visible in the valley of the old city of Ani at ground zero from the border within the military zone. The road between Kars and Igdir runs parallel to the border and is stretching through the Turkish and the Armenian military areas. Some ethnic Georgian communities are living in this area. exploited despite the proven harm done to the historical site of Ani. historically known as Serhat Kars. Armenia. The opening of the Karsatkhi-Cildir/Aktas border crossing will place Akhalkalaki at one hour distance from Kars. The city. the intersection point with Nakhitchevan. Incidentally. very close to the Armenian border. Ahkourian station is at 10-15 km from the Armenian city of Gyumri. One is struck by the stone mine situated in the Armenian border zone. The area is an environmently sensitive place. The border crossing with Armenia is at 35 km from the center of Igdir while the border post with Nakhitchevan is at 85 km away. come into sight on the left side Mont Ararat and the right side Yerevan. CEO of the Tekfen company and co-chairman of GEOC had an concrete impact. borders on an Armenian village. The Artvin-Savsat-Ardahan-Posof road runs through mountainous passes. sprinkled with old Georgian churches. Closer to Igdir. The Alican /Magara border crossing. The road after the city of Igdir. once open. The pumping station is located on the road from Ardahan to Posof. communication and mutual aid between Turkish and Armenian villagers is the norm: Armenian villagers regularly cross even at night to return cattle that have escaped across the border from Turkey. chaired by Mr Nihat Gökyigit. The last village is called Kalkankale. had a limited economic impact: the Ilgar pass on the Turkish side and the poor condition of the road between Vale and Akhaltsike on the Georgian side acted as a deterrent. the path is going very close to Armenian villages. The work of the TEMA foundation. This region is crossed by the BTC pipeline. the official border post between Turkey and the Soviet Union was sealed. The Turkish-Armenian border runs southwards following the Aras river. one can easily distinguish Metzamor. bordering three countries.
particularly from 1991-1995 when Georgia established a secondary customs control point on its internal border with Adjaria in order to levy some income from the traffic. southern Russia and Central Asia provides a major source of income. The Turkish-Caucasian reaches at its very ends the Turkish-Iranian border. is being reunified through intense cross-border cooperation. After a 70year closure. Russians are in charge of border controls. after which Azerbaijani supplies were overshadowed by Siberian oil and gas. transported through Novorossisk or Odessa. The pragmatism and willingness to cooperate behind the move 11 . Adjaria is integrating with the Turkish Black Sea coast. The closed village of Gogno is hosting dinners between Turkish and Georgian business partners. Economic growth continued until the start of the Soviet era with the construction of several factories and an oil refinery. Turks and Georgians can visit each other without visa. Although Georgians handle custom activities. Since independence. Georgia is currently the only former Soviet country to have waived the visa requirement for Turkish citizens. and for Georgia as a whole. Batumi: east-west corridor The study aims to put into perspective the impact of opening the Sarpi/Batumi border post on Georgian’s external trading relation and the effectiveness of the east-west road corridor thus established. Special emphasis is given to Sarpi/Batumi’s role in the economy of Georgia’s autonomous republic of Adjaria. Turkish citizens can board the Istanbul-Batumi flight with their identity card. The practices at the Geneva airport have been transferred to Batumi. a new era also began for Adjaria. while the transit trade towards Tbilisi. Conflicts between Batumi and Tbilisi over distribution of customs income were a major impediment to growth in the transit trade. Batumi became a hub of the Transcaucasian economy following the construction of a railway (1883) and a oil pipeline (1897-1907) that connected the port to Baku on the Caspian Sea. which was built and is being managed by the Turkish company TAV is being used for domestic flight connections of Turkish Airlines between Istanbul. Inspired by the European experience.Azerbaijan and Iran. Batumi remained a major distributor of oil products until the end of World War II. Hopa and Artvin. Turkish and Georgian authorities have been working at making the border dividing them meaningless. Caucasus. Control of the Sarpi/Batumi border post and the port give important leverage to the Adjarian authorities. and two major railway stations and customs areas have been constructed. Today Turkish-Georgian borderland is fully open to human and trade interactions. The Batumi airport. When Georgia gained independence in 1990. the autonomous region of Adjaria preserved its prosperity thanks to agriculture. 5. Batumi dreamed of becoming a window on the outside world. Sarpi/Batumi border posts and Adjaria’s external economic relations Seized by the Russian empire in 1878. The Sarpi village once divided by the security fence of the Cold War. The crossborder traffic with Turkey has been beneficial to both sides. A number of maritime connections have also been established with Trabzon. Though Batumi gradually lost its external connections. The Sarpi border crossing will also start functioning under Swiss standards with a unique customs point. Adjaria has been one of Georgia’s most peaceful regions and has made great strides toward economic recovery.
Crossings at Sarpi border gate. Individuals and trucks crossing the Sarpi-Batumi border crossing per year.946 12 .172 445.932.358 Source: Sarpi border post 181 7.108 1998 134.367 1999 238 673 238 475 20.346 Source: State Customs Review of the Autonomous Republic of Adjaria Table 4.176 135.182 254.552 475.689 49.525 1992 693.877 6.350.296 1990 135.621 1993 521.564.518 1992 781.626 1995 243.717 7.373 126.505 1997 283.998 38.114 2.000 280.615.396 12.022 141.255 26.138 26.462 235.425 1997 166 501 166 647 21.105 33.641 5.123. 1988-93 Year Entrance of Exit foreigners foreigners 1988 230 1989 8.125 4.737 46.392 136.514 1.139.549 6. 1990-95 Year CIS nationals 1990 144.704.303.997 of Table 2.463 1999 82.786 5.486 19.266 108.727 100. 1996-2000 Year Exports ($) Imports ($) Transit ($) Internal transit ($) 1996 295.514 Source: State Customs Review of the Autonomous Republic of Adjaria Total ($) 2.486 387.893 1998 210 714 230 097 30.695 332.649 1991 512.000 1991 438. Numbers of CIS citizens entering Trabzon.636 of Exit of Turkish Entrance nationals Turkish nationals 232 74 3.727 2000 201.671 19.751.095 545.041 3.557 6.431 2.804 7. Table 1.aiming at transcending the common border should guide Georgian and Turkish efforts to resume the ferry link. Adjaria’s external trade.689 Source: Trabzon Tourism Office Table 3.020. 19962000 Year Individuals Trucks Exit Entry Exit Entry 1996 198 541 161 958 21.439 22.536 1994 584.937 37.657 1993 491.779 2000 223 291 222 037 12.
268. There are ‘mirror problems’ with most bilateral statistics. Data from Georgian and Turkish sources differ significantly. From Georgia. 1997-99 Year Imports ($) 1997 27.ix Georgia’s 10 leading trade partners account for 74% of registered trade with four .554. The CIS and EU contributed 66% of Georgia’s registered imports.872 1998 22.6%) and Ukraine (6%). Azerbaijan and Ukraine .047. though the EU buys 17% and Turkey 15%.515 Source: State Customs Review of the Autonomous Republic of Adjaria Table 6.426 Romania 28.622 Exports to Turkey 168. Turkey. Furthermore.498 21.319 32. The main destination of Georgian exports is still the CIS.823 56. electrical engines (7%) and paper (6.244 UK 7.277. Turkish imports registered at Sarp customs. A significant share is not recorded at all.894 1994 67.4%).482.814 239.252 1993 34.143. Turkey fell to second position (13%) in 2002. Ukraine (7%) and Germany (6%) in the rear.519 Source: State Customs Review of the Autonomous Republic of Adjaria Diversification of Georgia’s trading relations It is difficult to draw clear conclusions about Georgia’s trade because of the lack of reliable data. bilateral trade volume is much higher.157 1996 110.3%).3% share worth $173.Russia. Turkey’s main exports to Georgia are sugar and sugar-based products (33.306 1999 24.883 Russia 7. with Azerbaijan (10%). In Turkey’s case. it mainly imports petroleum products (36.934 Total ($000s) 12.5% of the total in 2001). Germany (7. after being overtaken by Russia (16%).283 142. Table 7.392 92.006 Ukraine 11.444 13 .243.571 1.282.219.842 118. Georgia’s trade volume with Turkey has mounted rapidly since independence.495 1997 173. According to the Turkish State Institute of Statistics.9%).126 50. bilateral trade worth $12 million in 1992 was transformed into trade worth $270 million in 2001.042.190 25.096.4%).652 1995 68. Turkey was Georgia’s leading trading partner in 2001 with a 17. According to the Turkish statistics.accounting for around 46% in 2002. Evolution of Turkey-Georgia bilateral trade. Azerbaijan (8.7m.454 Russia 5. figures often do not reflect effective transactions.Table 5.944 Ukraine 10. 1992-2001 Year Exports ($000s) Imports ($000s) 1992 11.510 65. while Turkey accounted for a further 12%.4%) and scrap metal (6. the situation is equally problematic. followed by Russia (16. Source of imports and destination of exports in 2000 Countries Quantity (tonnes) Imports from Turkey 204.
1998-2002 Gates 1998 1999 2000 2001 Sarp 12.010 10.625 116.196 108.291 1999 37.468 18 Turkey 102 6.318 94.153 207.377 5. Bilateral trade.692 7.489 287. most of it accruing after establishment of relative internal stability in 1995.438 74.032 Total ($000s) 119.522 156.835 2000 73.987 Foreign direct investment in Georgia From independence till 2001.602 26. Table 10.315 815 717 Poti 573 Total 14.709 11.881 15.265 904 818 8.695 Source: Georgian Statistical Institute Imports ($000s) 85. Turkish-registered trucks entering Georgia.424 10.896 Source: Turkish State Institute of Statistics 91.933 Source: Association of International Transporters.031 182.897 1997 39.137 25.590 Total 179.728 UK 19.430 1.426 1998 20.778 2. The main foreign investors in Georgia in 1995-2001 ($000s) 1995 1996 1997 1998 1999 2000 USA 408 1.661 102.729 112. the United Kingdom and Turkey the top three investors.200 2000 131.623 2001 68.231 255. Investment from 1995–2001 accounted for $750 million of the total.1998 164.710 7.773 17. with the United States. Turkey 2002 7.727 Table 9. foreign direct investment in Georgia has amounted to $1 billion.338 9. 1995-2001 Year Exports ($000s) 1995 34.256 173.007 93.146 1999 114.314 127.506 22.769 2001 142.199 37.633 105.020 Source: Georgian Institute for Statistics 2001 23.197 118.489 70.686 96.216 Türkgözü 1. The opening of the border at Sarpi/Batumi clearly had a huge impact since it brought Georgia an opening to the world outside 14 .127 Table 8.000 4.622 10.681 Turkish relations are highly prized in Georgia and it has played a major role in helping it achieve some form of economic independence after the break-up of its traditional trading network.083 270.771 98.289 155.568 76.093 1996 25.908 8.486 19.
a third wave arrived with strategies that embraced the entire Caspian region. estimated at $4 billion at the break-up of USSR. the Unites States assumed first trading position after delivering two new Boeings. Political stabilisation led to an improved macroeconomic performance with trade turnover rising by 22% to $1. By 1995.5 million in 1998.6.3 billion. Russia had taken lead position with 21. A second wave of entrepreneurs. After years of war. Russia (15. arrived in 1996 after the country reestablished a degree of political and economic stability. a loan or money from the sale of their car. Turkish entrepreneurs can be categorised according to their date of entry in Azerbaijan.8%) and Iran (1.1% of Azerbaijani trade. it had fallen back to wartime levels despite a threefold increase in Azerbaijan’s total foreign trade and the signature of at least 200 commercial agreements between the two countries. Turkey was overall third foreign investor.8 million. the respective shares of its former leading trading partners were cut to Turkey (6.7%). turnover had fallen to $1. The new generation of Turkish businessmen is harsh in its criticism of these early pioneers who they refer to as ‘doner sellers’ and ‘cab drivers’. although few from this first generation remain. total foreign investment amounted to $1.6 billion. their capital consisting of a mortgage on their house in Turkey. Turkish investment in the non-oil sector Turkey is the largest investor in the non-oil sectors of Azerbaijan’s economy and the fifth largest in the AIOC consortium that is developing the Azeri. The Association of Turkish Industrialists and Businessmen of Azerbaijan (TÜSIAB) was established in 1994 and now boasts 200 members. The Koç group was among these new actors. In 2001. Chirag and Gunashli oilfields in the Caspian Sea. Others supplied foodstuffs and consumer products.2 million in 1996 and $355. The first arrivals date back to 1992. although Turkey was still the country’s third largest trading partner in 2001. After Azerbaijan’s oil and gas exports came on stream. but it was overtaken by Turkey the following year. When foreign trade was at its lowest level in 1995. In 2001. By 1997. In the same year. Turkey was Azerbaijan’s leading trading partner from 1996 to 1998. Russia (5. they opened Baku’s first restaurants and taxi services. But 1996 was a watershed in both Azerbaijani politics and economics. Azerbaijan is estimated to have had $230 million worth of trade with Russia and $215 million with Turkey.4%) and Turkey (13.x In 2001. when bilateral trade stood at around $100 million a year. Azerbaijan’s relations with Turkey Trade relations between the two countries Azerbaijan’s annual trade turnover. collapsed due to the loss of markets and declining incomes. however.9% of foreign investment in non-oil sectors. though the devaluation of the rouble boosted the competitiveness of Russian products.09 billion and Turkey accounted for 14.7%). Azerbaijan’s main trading partners were Iran (20. Since 1999 onwards. with 20% of them involved in the service 15 . including large companies and institutional investors.7 million in 1992 to $255. Most had no previous commercial experience.1%). a year in which Azerbaijani exports to Turkey reached $135. In that year. having lost half its value each year from 1992–1994. Indeed. behind the United States and United Kingdom. the development of foreign trade has been biased towards large oil importers.2%). it steadily increased from $212. By 2001.
However. Russia and Azerbaijan. Impediments to private sector development Prohibitive rents and an erratic fiscal policy seriously hinder the development of private enterprise. With a $145 million investment over five years. the life expectancy of Turkish businesses is relatively short and many disappeared with the 1998 crisis. regularly attend training seminars in Istanbul. Turkcell. while the development of the service sector has provided new sources of income and smoothed the shock of transition. Its creation of the retail chain.000 subscribers in 2002. an Israeli-Azerbaijani joint venture. An agreement between the government and the Turkish mobile phone company. TÜSIAB has has offices in Baku and Gence. Partnerships between Turks and Azeris have facilitated the transfer of know-how. led to the creation of a joint venture. A restaurant can be asked to pay a daily tax of $800.sector. 18% in industry. ‘but we have to comply with the system. 64. Not being entitled to purchase land under Azerbaijani law is a further handicap since foreign entrepreneurs are at the mercy of local landlords. The corporate culture is well-rooted and young executives. ‘There is no mafia here.3% of which is owned by Turkcell’s holding company. allowing Azeris to learn about the market economy on the job and to acclimatise to new ways of working. Fintur. Since domestic products are 50-70% less expensive than imports. The large number of Turkish restaurants in central Baku gives Turkey’s economic activity in Azerbaijan strong visibility. around 80% of products sold in Ramstores were imported from Turkey. Ramstore managers have been involved in modernising production facilities. 75% of Ramstore products are sourced in Azerbaijan and goods from Turkey or Russia comprise the balance. while the development of small shops has changed the city’s image and atmosphere. but Azercell introduced the GSM system and currently holds 85% of market share with 570. Koç Group created a distribution chain integrating Turkey. The company has 228 employees. of whom only seven are Turkish. In 1997. had a positive impact on Azerbaijan’s economy. mostly graduates from Azerbaijani universities. Discretionary increases of rents are a frequent cause of bankruptcy. Fiscal policy is also problematic. 16 . Seven years on. Parallel to the creation of the Ramstore brand. The establishment of a distribution network brought new openings and boosted the development of small and medium enterprises.’ said one Turkish businessman. accelerating the transition process and the introduction of market economy rules. was the first to establish a mobile phone service in Azerbaijan. Bakcell. It is hope that a new fiscal law will clarify the situation. Turkish entrepreneurs play a training role. as in Istanbul. Azercell. and 18% in commerce. Ramstore. Ramstore work with around 100 local suppliers and the chain can claim some credit for restructuring the country’s agricultural sector. Azercell is the largest foreign investment in the non-oil sector and a significant taxpayer. The Koç Group has been interested in the republics of the South Caucasus since their independence from the Soviet Union.’ Taxes are collected on a daily basis according to the amount that the collector is told to gather. 9% in textiles or furnishing. elaborating new methods of production and introducing packaging concepts to local food producers.
under international pressure. ‘private importers’ were able to sell imported Pepsi Cola at a cheaper rate than the official distributor in Azerbaijan. According to Armenia’s Ministry of Foreign Affairs and Ministry of Industry and Commerce. Indeed. cleaning. Some try to pass off Turkish-made products as Iranian and Russian.S. fruit. textiles and food products are Turkish brands. while others picked it up on visits to Turkey). According to the U. 60% of all imports were oilrelated and free of duty. They mainly import raw materials. 7. there are some 20 Turkish-Armenian joint-ventures.34% in 1994. Trade links between Turkey and Armenia Trade between Armenia and Turkey does exist despite the border’s closure. On the one hand. Most Turkish wholesalers in Malatya market are in the transport and logistics businesses and come from the Black Sea. customs duties are an important source of income. However. Turkey’s relations with Armenia The decision to close the border with Armenia in April 1993 and suspend trade was a major obstacle to developing commercial exchanges between the two countries. amounting to $70-150 million each year. Turkish merchants broadly divide into two categories. the decade also witnessed the evolution of wide-ranging strategies aimed at circumventing the embargo which allowed for a degree of bilateral trade. Because customs policy has to meet budgetary objectives. An air corridor was opened in 1996 to connect Istanbul with Yerevan. because promoting national production is a governmental priority. a few kilometres from central Yerevan.The oil sector enjoys preferential treatment since all products utilised in developing the oil industry are exempt from import duties. but transport by road requires crossing a third country so goods and and passengers to Armenia have to pass through Iran or Georgia. while some Azerbaijani importers operate under ‘preferential conditions’ that lead to unfair competition. The market in the popular district of ‘Bangladesh’. Embassy in Yerevan. Even on a quick visit. Customs revenue represented 20. Azerbaijan later agreed to unify its tariff rates . is known as Malatya Pazarı. it is obvious that a large proportion of its agricultural. Some wholesalers go directly to Turkey to purchase merchandise but others prefer to buy from a Turkish wholesaler. The current average tariff rate is 15%.xi Turkish wholesalers in import-export sector and the shuttle trade feed the market with goods. Similarly. vegetables and consumer goods. either because Turkish goods are considered inferior or because previous boycotts have taught them to be prudent. particularly Trabzon. often fixed for a very short term. A liberalisation process initiated in 1997 reduced customs duties but. Turkey is Armenia’s seventh largest commercial partner although export destinations are usually registered as Georgia and Russia. On the other. asking if a product comes from Turkey is a sure way of starting a conversation and most traders understand Turkish (some say they speak it at home. Turkey is not mentioned as the country of origin: exports tend to originate from third-party firms based in Switzerland. By 2000. foreign non-oil importers find it difficult to foresee how much duty will be required. However. up from 0. although companies with Turkish capital are represented by nationals of a third country.1% of budgetary resources in that year. customs policy should aim at restricting imports. A 17 . so increased non-oil imports lead to increased revenues. customs policy faces a dilemma. Foreign importers working in non-oil sectors can be seriously affected by current customs policy. In the 1990s.
They also admit to having a taste for adventure. above all when he learns the merchandise is due to be exported. Particular attention is paid to Aybaki in this study since it was the company chosen to make the journey. Bus companies estimate that passengers on a single bus will spend around $100. the total value of the shuttle trade was estimated at around $2 billion per year. The four firms operating in the market 18 . Women in the shuttle trade constitute more than half of all passenger journeys.xv Interviews with Turkish traders and businessmen give an overview of the difficulties of the Armenian market: a. Others use Turkey to transit to their ultimate destination. also run services. dominate the land connection between the two countries. A wholly-owned Armenian company could not compete in the sector because vehicles registered in Armenia are not permitted to enter Turkey. that it was possible to find ‘Karadenizli’xii throughout Turkey and that Trabzon traders were in nearly ‘every country of the world’. Some insist on their lack of creditworthiness. c. Though they define themselves as businessmen. The oldest are often travelling to work illegally for Armenian families in Istanbul. The fact that the market has become more structured complicates access for businessmen with limited capital while the creation of new distribution networks has made it more difficult to profit from importing. continue to worry Turkish merchants. they say. Interviewees said . Bus companies shuttling between Yerevan and Istanbul are an important source of information.000 on shopping during a single trip. they allege. AST and Buse. particularly with regard to perishable goods or products with high transport costs. They stay in Istanbul no longer than three days since their objective is to shop as quickly as possible and to spend as little as possible. organised during a period of political tension. Aybaki and Mahmudoğlu. but the majority spend only a few months there. Sellers tend to increase prices if the buyer is Turkish.xiii They are prepared to supply any product. b. In the period up till January 2001. look for short-term profit and have little knowledge of marketing. It is increasingly difficult to penetrate the Armenian market and remain there.they were attracted by travel. That that the majority come from the the Black Sea region is not accidental. The cancellation of orders is a major risk. Boycotts against Turkish products. Georgia and Azerbaijan before entering the Armenian market. e. Turkish businessmen often complain about the behaviour of their Armenian partners who. Two Turkish firms. Women between 35-40 years old comprise more than 80% of passengers and it is possible to categorise them according to the purpose of their journeys. but two other companies. they admit to having made irrational choices by staying in Armenia during the conflict and continuing to operate in a low-profit and high-risk market. but readily confess that a large part of exports to Armeniaxiv are of low-end quality (they actually claim to suffer from this). Many had been involved in Russia. which they unanimously preferred because ‘there are not many Turks’. Settlement of transactions involves enormous problems and so is usually made in cash. A fourth group indicates that they go to ‘work in the hotels’: prostitution is certainly one activity field. d. f. the EU. The determination of prices is erratic. Their main objective.minority came to Armenia in the first years of its independence and now have settled. is to drive Turkish traders out of Armenia and confiscate their merchandise.
In response to a question about the possible ill effects it might have on Armenia’s economy. Now.xxi At a ceremony in August 2003 marking the 105th anniversary of Armenian railways. North America and Southeast Asia.xx Furthermore. The effect of diversification of Armenia’s external connections Since independence in September 1991. it seems to have reached a consensus over whether to re-open the border. Armenian merchants have now begun to orient themselves toward other destinations since the entry into force of new Turkish visa legislation in 2001. China and Dubai. the number does not exceed several dozen. However. Considering the trends of the past two to three years. Broadly speaking. Successive Armenian governments therefore downplayed the blockade and rarely complained about it either at home. Istanbul faces serious competition from Russia. Armenian railways are 800km long and work at 15% of their capacity. the government asserts that opening the border is not a matter for discussion since Armenia made no attempt to close it in the first place.xviii Since 2001. the Minister of Transport and Communications Andranik Manukyan said:xxii ‘All that remains is for Turkey to show political will and open the border. the number of carriages unloaded in Armenia was 2. In GDP terms. Buses are equipped with an empty trailer that weighs nearly 15 tonnes on its return journey. as soon as the prospects for re-opening the border improve. northeast Iran and eastern and southeast Anatolia. the shuttle buses’ final destination was Trabzon. The regional market includes Georgia. while seeking to deny it any role in mediation over the Nagorno-Karabakh conflict.xix Internally.xxiii a market of 50 million consumers with a combined GDP of $10 billion. arguing that the border closure contravenes a range of internationally recognised.xvii Hong Kong. but this was rapidly displaced by Istanbul where prices are more competitive.xvi In the early years. Commodities are purchased directly from the producer or wholesaler and Armenian specialists know the Istanbul markets intimately. Armenia is far from the markets of Europe. The furthest destination of carriages from Yerevan is currently Tbilisi. or on the international stage. Opening the border is important since Armenia will then become a transit country for shipments from Georgia and our dependence on Georgia will lessen. east and southeast Anatolia and northeast Iran represent one third of the regional 19 . the status of the Turkish border is proving to be a political and economic issue. the government has been more active in drawing international attention to the issue. Armenia has maintained a formal policy toward Turkey that looked forward to the establishment of full diplomatic and trade relations with its neighbour. opening the border is depicted as purely a policy that will have a positive impact across the whole region. Azerbaijan. As a result. Iran. Armenian railways will carry around 30% more cargo in 2003 than in 2002. and opening the border would only provide an additional impetus for development. legal principles. In Soviet times.000 per day. the potential impact of closer economic and social contact with Turkey is also raised. Foreign Minister Vartan Oskanian pointed out that it had already adjusted to the blockade.’ The cost of the border closures on Armenia’s economy is obvious.each make two trips a week. Access to Russia is limited by the mountainous relief while the consumption centres are situated in the north of the country.
in the event of both embargoes being lifted. The distance between Yerevan and Tebriz is 350 km. however. and punished Armenian consumers by increasing the price of imports. The approach developed at a national level usually contradicts the perception of the population in the border regions themselves. 20 . Others put forth arguments related to security. have criticised national policies toward Armenia. Turkish and Armenian businessmen have succeeded in finding strategies to circumvent the embargo. The road that is currently used is 50% longer than its predecessor and crosses difficult terrain. They estimate that ‘focusing on the border question’ is only a diversion and that priority should be paid to the elaboration of a development programme for the peripheries. The potential gains range from $75-300 million. The Association of Industrialists and Businessmen in Turkeyxxvi has openly advocated for the development of relations with Armenia and the Unions of Exportersxxvii. Azerbaijan and Nakhitchevan also harms communication with Iran. the Armenian private sector has divergent views on the economic impact of the opening the borders. For Turkey. while the smallness of the Armenian market and its inability to plan at a regional scale are disincentives to potential investors. re-opening one railway line will increase Armenian exports by 25%. Revitalising eastern Anatolia and Turkish Black Sea coast The opening of the Turkish-Armenian border is a vital issue for Armenia. Opponents to opening the border.xxix there is concern about possible confrontation between Azeris and Armenians. The embargoes also increase by 38% access costs to markets in northeast Iran. Relations with the region and its distance from the centre determine the region’s relation with the border. Nevertheless. Iğdır and Trabzon. Those who do not view opening the border as a priority are thinking within a national framework: for them.market. A study by the Armenian Ministry of Industry and Commerce estimated that. The rail link across Nakhitchevan to Iran is also closed. Turkish and Azerbaijani embargoes currently restrict Armenian access to 44% of the regional market – the markets of Anatolia and Azerbaijan. the Istanbul Chamber of Commercexxv has been interested in Armenia for several years. while re-opening all four will double them. However. opening the border and gaining access to Armenia’s market are only of secondary consideration. Furthermore.xxiv Closure of the borders with Turkey. Opening the border and the establishment of direct relations with Armenia are vitally important for the cities of Kars. Difficulties of access to the rest of the world increase transportation costs.xxviii The border closure has hindered the exports of small and medium-sized enterprises in regions remote from the economic centre. Since these regions are partly populated by Azeris or receive thousands of Azeri visitors. however. they argue. As mentioned above. but the road traversing Turkish territory and Nakhitchevan became impracticable in the 1990s. the region’s underdevelopment is a result of the lack of interest by the economic and political decision-makers. opening the border would only increase the region’s isolation from the centre. represent only a tiny minority. official groups dependant on the Undersecretariat of Foreign Trade.
000. As for security issues. the number of trucks transiting through Iran amounted to 4. near Digor. Similarly. Since 1997. According to interviewees.500 preferred the Iranian route. while those crossing Georgia accounted for a further 3. 3. and emphasis should be given to ‘other means of watching what is going on the other side of the border’. The construction of the railway system of eastern Anatolia. they argue. The Soviet rail system consisted of 32 railways. One official from the Iğdır Chamber of Commerce proposed that the border be temporarily opened for a determined time with the objective of increasing Armenia’s dependence on Turkey. Iğdır is situated half an hour by car from Yerevan. Routes linking Turkey to Asia choose less and less to cross Georgian territory. with a total length of 145. they cannot help but add that opening the border will modify the power balance in Turkey’s favour. Even if interviewees believe ‘the conquest wars belong in the past’. In 1999. Borders have never protected countries against threat.370 trucks in transit.250 using Georgian territory. compared to 1. communication and mutual aid between Turkish and Armenian villagers is the norm: Armenian villagers regularly cross even at night to return cattle that have escaped across the border from Turkey. running from Sarımakış to Kars. The main motivation is to sell their products in Yerevan. Kars is situated 20 km from the border gate at Doğu Kapı. they say that ‘Turkey can easily invade Armenia if necessary’. This development also applies to connections with Central Asia and the Far East. they argue.458 to just 7. 21 . which is also the last station on the Orient Express across Anatolia. The lights of Yerevan have fascinated the inhabitants of Iğdır for decades as these remarks from the Turkish side of the border testify. on the road connecting Kars and Iğdır. The border village of Akyaka. and they carried 55% of all passengers and 25 % of all commodities transported. In 1998. the Iranian route recovered its dominance with 2. Further integration between Turkey and Azerbaijan The opening of the border crossing at Sarp/Batumi offered a new transport corridor linking Turkey with the Caucasus. On the border.Entrepreneurs and traders in the border cities expect an immediate gain from opening the border. Caspian and Central Asia regions. The wish to establish relations with ‘those on the other side’ is just as strongly expressed as the economic benefits that are likely to emerge. borders on an Armenian village.010 in 2000. Turkey is linked to the Transcaucasian railway system built during the Russian empire and subsequently upgraded during the Soviet era. Since 2000. The road that leads to the border with Nakhitchevan at Dilucu continues on to Yerevan. In an age of globalisation. the number of Turkish-registered trucks going to Georgia has fallen from a high of 20. Turkey and Armenia are separated by the Arpaçay river.000 km.250 trucks registered in Turkey transited to Azerbaijan via Georgia. The desire to communicate with neighbours is all the more important since many families in the region are originally from villages in Armenia. dates back to the Russian period.200. while 2. transits through Georgia have decreased steadily and in 2001. the need to open and even abolish the border altogether is justified by economic pragmatism. borders create economic burdens and constitute an aberration in political terms.
the most favourable east-west transport corridor between the Caspian basin and world markets. but the railway connection between Kars and Gyumri was operational until 1992. Akyaka. security concerns are minimised. Ensuring linkage with the Caspian basin is of utmost importance since investments are. Armenian and Azerbaijani railway systems will guarantee. and the Yerevan-Sevan-Dilian-Gazakh-Baku line. The connection of the Turkish. Gyumri is linked to several other railways. via the Anatolian-Caucasus-Caspian route. which requires minimum investment. which is situated at the crossroads of east-west and north-south communications. it will be $67000 in a Turkish one. will prevent the need for the extra deviation and transshipment costs. political disputes and closed borders have condemned this huge railway network. Among all the Black Sea ports. Most lines already make regular calls in ports like Istanbul and Mersin. Conflict. Meanwhile. which is more competitive than the Poti-Tbilisi-Baku route. For shipping lines coming to Istanbul or the Mediterranean region. Georgian ports are the most expensive. The action plan for the 2002-2004 period takes into account rehabilitation of the container terminal at Gyumri railway station. followed by Ukrainian. the Russian Federation and Central Asia. integrated the railway connection between the Turkish city of Kars and the Armenian city of Gyumri in the TRACECA transport corridor. providing access to Transcaucasian railway system. Mersin. the connection between Turkish-Armenian-Azerbaijani rail systems would ensure a viable access to the Caspian for southeastern Europe and the Mediterranean region. The new TRACECA map.000 at a Georgian port. and will be. Russian. mostly from Western countries. and Istanbul is further linked to the Trans European Networks via Corridor IV. In addition. Black Sea ports are less favourable since the use of small feeder vessels requires transshipment. Turkish and Romanian ports. Bulgarian. 22 . The ports of Haydarpasa and Ambarli in Istanbul are of utmost importance since the Istanbul-Kars railway across Turkey has become part of the Transport Corridor EuropeCaucasus-Asia (TRACECA). Turkish ports are cheaper than Georgian ones. would provide the most costeffective and secure access from Europe to the Caspian region. crossing the Dardanelles. There have always been compatibility issues between the Turkish and Soviet systems. The sea-rail combined transport route linking Anatolia and the Caspian basin is also the most cost-effective route.The Armenian railway system connects Turkey with the Russian/Soviet railway network. the last station of the railway that links Istanbul with Kars. the Bosphorus and the later deviation to the Black Sea all represent extra costs for shipping companies. Armenia is the hub of the regional railway network and several lines cross its territory. The modernisation of these two ports and the rehabilitation of the railway to Kars. If the cost per cargo is $10. approved in December 2001 in Tbilisi. Consequently. which offers one of the best port facilities in the eastern Mediterranean. transportation costs for cargoes are cheapest using Turkish ports. the Samsun-Kars-Yerevan-Baku route. which was once essential for communication across the Transcaucasus. including the Yerevan-Julfa-Baku line that runs through Nakhitchevan along the Iranian border. will ensure an important linkage for intra-regional transportation around the Black Sea. Furthermore. is also connected to the Armenian city of Gyumri. Generally speaking. Transportation costs between Samsun-Kars and Mersin-Kars being roughly equivalent. providing access to the Caucasus.
213 13. Called the Gate of Orient.115 2002 (janjune) 3. The Treaty of Kars in 1921 defined the border between the USSR and Turkey.500km2.334 Iran 19.037 5. With a surface area of 5. 30 locomotives.010 Russia 27.120 17.703 19.159 Kazakhstan 4. and lead to the implementation of projects that are regional in scope. The Armenian offensive against Nakhitchevan was halted at Sadarax.960 1.514 Nahkitchevan 3. each pulling 150 wagons. Integration of Turkey in the TRACECA programme will bring new openings for regional cooperation and the Anatolian-Caucasus-Caspian route will add a cost-effective.560 10. 1997-2002 1997 1998 1999 2000 2001 Georgia 20.146 3. Nakhitchevan was given to Azerbaijan in 1920 by Soviet officials despite Armenian protests. the establishment of a transport corridor through the Caucasus is of utmost importance.664 1.762 3. then President of the Council of Nakhitchevan. further enhancing the process of integration. Nakhitchevan became an important communication hub and the Russian empire’s chief access to Persia.332 3. In the 17th century.232 12. 40km to the south.425 Azerbaijan 4. Nakhitchevan is situated in a mountainous region bordering Iran and is drained in the south by the River Araxe. commercially viable and strategically beneficial east-west railway that will ensure direct links between Turkey. After the opening in the 19 th century of the border gate at Culfa. Nakhitchevan: intersection of north-south and east-west connections Nakhitchevan is said to be the oldest city in the world.918 8.999 Source: Association of International Transporters.962 1.112 1.537 10. Noah would have chosen to settle in Nakhitchevan when he came down from Mount Ararat where his Ark landed.482 6.848 5. Turkey 10. The Nagorno-Karabakh conflict cut Nakhitchevan’s communications with Azerbaijan.459 2.338 9. Baku and the Caspian region.981 2001 (janjune) 5. 23 . Parallel to the construction of a energy corridor between the Caspian region and Turkey. Table 11. and Moscow. In Soviet times.080 2. passed through Culfa every day.458 14. and granted Turkey the status of guarantor of Nakhitchevan’s territorial integrity. the traveler Evliya Celebi described the city as one of the wonders of the world.639 4.679 4. The measure had a dissuasive impact together with the diplomatic contacts between Haydar Aliyev.933 10. The development of transport routes across Transcaucasus to Turkey will boost the integration of production and distribution networks.819 3.551 4. the enclave is at the crossroad of east-west and north-south railway connections. eventually opening Armenia and Nakhitchevan to international trade and investment.436 2. The Turkish Prime Minister Tansu Çiller asked parliament for permission to send troops to protect the enclave in case of further Armenian attacks and a Turkish force was placed on a state of high alert.944 7. Trips to CIS countries and Asia from Turkey.588 3.227 12.Further development of economic relations between Turkey and Transcaucasus depends on further improvement of their communication.857 3.409 5.070 13.692 7.
of course. Turks. The enclave’s economy has been entirely restructured with Turkish aid. is blockaded by Armenia on its west. The links with Iran are commercial by nature. opened in May 1992 and a bridge built over the River Araxe link Turkey to Nakhitchevan. Access to the west offered new centres of economic attraction leading to a change of course and moderate. The Dilucu border gate. which has since interrupted gas and electricity supplies to the Nakhitchevan. The former Turkish-Soviet border. Flights connecting Nakhitchevan and Baku are the only remaining direct link. ruled out. 9. but those with Turkey are different by scope and nature. Nakhitchevan traditionally specialised in viticulture with annual production of 170. Links with Turkey The opening of the border post with Turkey provides an exit to the west which is vitally important for such an isolated territory. nevertheless. as is its eastern connection to Baku. lost contact with their ethnic neighbours who.000 tonnes and 17 wineries. The diversification of external relations by the new states of the South Caucasus allowed them to emancipate themselves from the Soviet space and their new contact with Turkey reduced their dependency on the north. Nakhitchevan has to depend on Turkey and Iran as a result of the Armenian blockade and the interruption of all land communication with Azerbaijan. The southern connection towards Iran is also operational. north and east. The sheer size of the factories built in Soviet times made them obsolete since they had been designed to export to 20 countries. All industrial production has stopped. The rail connection between Kars and Gyumri ensured continued land communication between Turkey and USSR. Exports to Turkey were impossible due to the state monopoly on alcoholic drinks and exports to Iran were.The Autonomous Republic of Nakhitchevan. as recently as 1991. The collapse of the Soviet Union and closure of the Armenian border condemned the enclave to a total isolation that also included the loss of its export markets. once NATO’s eastern frontline and a source of threat. The impact of the blockade is all the more pronounced because the Soviet-built infrastructure for energy delivery passed through Armenia. free-market reforms. The closure of the Armenian border devastated the sector and large areas of vines have been uprooted. while the textile factory alone had the capacity to produce for all Turkey. had never been hermetically sealed but crossborder interactions were at a very low level. All land communications with Azerbaijan are also blocked. which has preserved its territorial integrity. The northern connection towards Russia. Georgia and Turkey across Armenian territory is severed. 24 . a few kilometres from Armenian-controlled Meghri. The railway is disused for most of its length. commonly known as Hasret Kapisi. A small portion is still used for an internal rail connection with Ordubad. Prospects for sub-regional integration: The Turkey-Caucasus connection The collapse of the Soviet empire had an important impact on Turkey’s relations with her close neighbourhood. they still considered ‘Russian’. The 10-km border between Turkey and Azerbaijan had been closed since 1921 and the separation was so intense that the population of Nakhitchevan was unaware that their neighbours across the frontier spoke nearly the same language.
the economic dimension of the political settlement of conflicts should not be underestimated. and lead to the implementation of projects that encompass the entire Caspian region. Conclusion Trade links between Turkey and South Caucasus are shaped by existing conflicts that have impacted severely on logistics in the region. In this regard. while the Turkish-Georgian route is the most efficient north-south link. with its major hubs on the Turkish Black Sea coast and the Autonomous Republic of Adjaria. 10. now leads to a dead end. The fear of economic domination is widespread. Broadly speaking. The Turkish private sector has an important role to play. The enclave leans on Turkey for survival and has become a centre for smuggling to Iran. The Iranian option remains the most cost-effective. Nakhitchevan’s predicament reveals how hard it is to consider an east-west connection through Georgia to Azerbaijan. Neither Turkey nor Azerbaijan can play a central role in developing east-west connections. In this regard. control and territorial gain. it is essential to deal at once with the east-west and north-south connections that link Turkey to the regional network. Nakhitchevan. Case studies of Turkish-Azerbaijani and Turkish-Armenian economic relations highlight the inefficiency of existing connections via Georgia and the cost of closing the Turkish-Armenian border. Turkey’s eastern border is still sealed in parts. the new. communications between Turkey and Azerbaijan cannot transit through South Caucasus because one of the roads is blocked and the route through Georgia is not attractive. although an Anatolia-Caucasus-Caspian trade route would foster Turkish-Azerbaijani trade links and strengthen the potential of transit countries. Furthermore. land communication with the Caucasus will transform Anatolia into a crossroad of north-south and east-west trade. For the time being. paradoxically. The main eastwest transport corridor is the land connection between Turkey and Georgia. rather than confrontation and domination. Foreign investment is often associated with ownership. Armenia also provides the best access to Azerbaijan. once a hub of communications. became a cul-de-sac with the breakdown of traditional transportation routes. and Georgia the best access to southern Russia.However. economics being perceived as leverage to achieve political goals. the Turkish-Armenian route is the most efficient east-west connection. The strenghtening of transport through the Caucasus will also boost the integration of production and marketing networks. once at the intersection of east-west and north-south trade in the Russian Empire. The Caucasus. Border openings and the establishment of official trade relations carry the 25 . east-west link between Turkey and South Caucasus is not fully operational and. but the fact that the opening occurred in the context of a severe breakdown of north-south connections generates a serious bias. There is a need to promote pragmatically-oriented approaches based on selfinterest and business initiative. The reshaping of Georgia’s external trade links after the opening of the Sarpi/Batumi border crossing is noteworthy. The restoration of transport links has the potential to mitigate tensions. Armenia is both Turkey’s gateway to the Caucasus and Central Asia and re-opening the Turkish-Armenian border is of utmost importance for the development of Armenia’s external trade relations. and to stress the importance of competition.
the Black Sea. vi The claim was tantamount to a demand for naval and air bases in the area. ix For instance. in most cases. xiii ‘I was told that there were no Turks in Armenia and I never hesitated to go there. xiv ‘There was a tendency.’ Molotov’s note ends with the words ‘the Russian government has no territorial claims on Turkey. products that were impossible to sell in the Turkish market. and the borders of Turkey. 1973 iv The Treaty of Alexandropol was signed on 3 December 1920 between Turkey and Armenia. Molotov. Georgian exports to Turkey amounted to $53. xviii Address by Armenian Foreign Minister Vartan Oskanian at a conference by the Turkish Economic and Social Studies Foundation. i The 7. The Republic of Armenia Between Crescent and Sickle: Partition and Sovietisation. The very fact that. Malatya is a Turkish city in Anatolia. 1996). ‘Armenia and the Caucasus in the Genesis of the Soviet-Turkish Entente’. ii Dumont. crossing the Baltic. xi ‘Market of Malatya’.potential to foster new dynamics to defreeze conflicts by questioning the status quo. xvii Iran is not a frequent destination since visa fees increased to $150.’ viii ‘Border city’ in Turkish.G.6 million in 2002 according to Georgian official statistics.G. vol. signed by the former foreign minister. The boundaries set by the treaty turned out to be the permanent Soviet-Turkish border.2 million. July-September 1977. ‘It is impossible to give up!’ xvi The companies also transport merchandise.056 km Iron Curtain ran from the Kora peninsula to Mount Ararat. x The overwhelming importance of oil products in Azerbaijani’s trade since 2000 has modified the geographical destination of exports. V. Economic interactions are a tool for reaching political agreement because they provide common ground for establishing a first level of trust and increased interdependence. Certain hardships can harden the resolve of people who are unfairly besieged.’ said one merchant. and thus is registered by Turkey as trade with Georgia. International Journal of Middle East Studies.7 million according to the Georgian statistics. And we are no exception. P. Georgian exports to Turkey in 2001 amounted to $68. In reaction. ‘In the name of preserving and strengthening peace and security. ‘L’axe Moscou-Ankara : les relations turco-soviétiques de 1919 à 1922’. Among the main reasons for the discrepancies are the use of double invoices to avoid high taxation at customs and the fact that Turkish trade with Armenia transits mainly through Georgia. vii The Soviet Union renounced its claims on Turkey in the note on July 1953. Turkey joined NATO in February 1952. No. Cahiers du Monde Russe et Soviétique. ‘Karadeniz’ means the Black Sea in Turkish. The main importers of crude oil from Azerbaijan are EU countries and Israel. at one time. 18-3. What is of utmost importance is that political settlement should not be a pre-condition for establishing economic relations.M. On the contrary. whereas $137. rather then recognise the facts on the ground and exacerbate centrifugal forces. the heart of the European continent. It is not too 26 . borders remain frontlines emphasises the need for peace agreements. the more we continue. xii Person who comes from the Black Sea region. held in Istanbul on 26 June 2002: ‘It is evident that we are not as fragile as some would wish us to be. R.5 million of Turkish imports from Georgia were reported by the State Institute of Statistics of Turkey (SIS). 4. the Soviet Caucasus and Iran. as well as the borders between Turkey and the three Transcaucasian republics v Hovannisian. R. ‘the governments of Georgia and Armenia have found it possible to renounce their territorial claims on Turkey. to deliver very poor merchandise.’ said one of the merchants interviewed.’ xv ‘The more we lose. iii Hovannisian.’ it read. while the SIS registered $127. vol 4 (University of California Press.
‘Les Relations Arméno-Turques: la Porte Close de l’Orient’. it is only beneficial. xxviii Our conclusions are based essentially on the interviews in Trabzon. 6 October 2003 xxii Arminfo. Armenian commerce may receive high dividends.cba. xx Caspian News Agency. The good of the Turkish road network would allow Armenian producers to quickly reach the Turkish market. 4 August 2003 xxiii This region represents 9% of Turkey’s GDP. I am absolutely sure that the opening of the border is beneficial not only to the two countries.’ xxi Mediamax News Agency. 2003/1.000 Azeris from Nakhitchevan were visiting Iğdır every day in the second half of the 1990s. Les Rapports du GRIP.edu/centers/ciber/workingpapers/armenia1. xxvi Türkiye Sanayiciler ve İşadamları Derneği. discrimination and blockades have not achieved their intended goals. they may have added to our determination to solidify and strengthen relations with those of our neighbours who value our friendship and share with us common interests both bilaterally and in the region. such global problems need a broad approach. I suppose that negative nuances may come up in individual spheres. But if it starts functioning.’ Working Paper. the railway that starts from the Armenian border and goes through Turkish territory as far as the Syrian port of Latakia is not functioning at the moment. When asked by the press about the possible negative consequences for the Armenian economy if the border with Turkey were to open. but also to the region as a whole.pdf xxv İstanbul Ticaret Odası. University of Florida http://bear. Certainly. xxiv Beilock. It is good because the republic will gain access to the Turkish market. and then to the Arab market through Turkey. 27 . xxvii İhracatçılar Birlikleri.soon for our neighbours to realize that the last decade's politics of pressure.’ xix Tavitian. 21 July 2003. But in the end. Instead. Brussels.ufl. Armenia’s Foreign Minister Vartan Oskanian replied: ‘I do not suppose that the possible lifting of the blockade from the Armenian-Turkish border will have any negative consequences for our country's economy. R. ‘Armenia’s Economic Dead End. xxix Data from the prefecture of Iğdır reveal that about 100. For example. G. N and Gültekin.
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