More than 100 Turkish companies are operating in Georgia, with investments amounting to $600 million.
On the other hand, Russia, being Turkey’s foremost trading partner with a trade volume of $28 billion, is home to many leading Turkish companies, which have invested $6 billion in the area. Many analysts caution that Turkey needs to take a very balanced approach to protect its interests in both countries. Turkish Airlines (THY) flights, cargo transportation and oil flow through the Baku-Tbilisi-Ceyhan (BTC) pipeline all stopped yesterday.
Long lines of semis waited on the Turkish side of the Turkish-Georgian border, awaiting news that the fighting was over and that it was safe to transit Georgia.
At risk are gas and oil pipelines traversing Georgia and Turkey, with the infrastructure of which Turkey hopes to become an energy hub for Europe. Turkey fears the instability might deter potential investors from sponsoring pipelines. Georgia's importance as a transit state will increase if Western companies invest in Turkmenistan's gas fields and look for an export route across the Caspian Sea by bypassing Russia.
The BTC oil pipeline, led by BP, opened in 2006 and can pump up to 1 million barrels a day of Azerbaijani crude oil to the Turkish port of Ceyhan. The BTC, last week, was allegedly targeted by the terrorist Kurdistan Workers' Party (PKK), and nearly 70,000 tons of oil burned. Russian officials said yesterday they do not intend to damage the BTC pipeline crossing Georgia. Russian Ambassador to Azerbaijan Vasili Istratov said at a press conference that Russia knows the strategic importance of the pipeline for neighboring countries and that it wanted to protect the pipeline.
The Baku-Tbilisi-Erzurum gas pipeline takes gas from the Shah Deniz gas field in the Caspian Sea to Erzurum in Turkey. The pipeline, jointly operated by BP and Statoil, began exports to Turkey in 2007.
Following various disagreements with Russia, Turkey has looked to diversify its import sources and has ambitions to be an energy hub rather than a transit nation for Russia. State-owned Turkish Pipeline Corporation (BOTAŞ) is part of a consortium led by Austria's OMV to build the Nabucco pipeline, which would transport gas from the Caspian in Central Asia, reducing dependence on Russia.
The Blue Stream natural gas pipeline connects the Russian system to Turkey. Russia, together with Italian oil company Eni, has a project to extend Blue Stream to southern Europe through Turkey, which has also started construction work on the Baku-Tbilisi-Kars (BTK) railway project to connect transit routes from East to West.
According to Levent Metinoğlu, deputy director of the TÜYAP Exhibition Group, the amount of trade between Georgia and Turkey was about $945 million last year. Speaking to Today's Zaman, Metinoğlu said that there indeed was a huge development in trade relations between Georgia and Turkey and that it had peaked during Georgian President Mikhail Saakashvili's tenure. "Georgia is also important since it is a gateway for Turkey to Azerbaijan and the Central Asian countries, so that our investments play a crucial role there," he said.
Metinoğlu noted that the recent crisis between Georgia and Russia will not significantly affect Turkish economic relations in Georgia. "I don't think that the war in Georgia will push Turkish companies to close their businesses there. Businesses are concerned about the domestic politics of Georgia. I don't think Turkish companies will be affected by the war as it is primarily limited to South Ossetia," he said. "I don't think any bad scenarios could be drawn from this situation. Turkish companies will continue to operate in Georgia as before," he added.
Turkish-Georgian Business Council Chairman Tuğrul Erkin says, "Turkey needs Georgia as a gateway to open up to Asian markets, and Turkey also plays an important role as Georgia's window to Europe." Speaking to Today's Zaman, Erkin pointed out that every day 500 trucks cross the border heading into Georgia. "We have significant investments in Georgia -- the large airports in Batumi and Tbilisi being two of them."
Erkin said the conflict might greatly damage economic relations. "Trade, investment and business require a stable and secure environment. Now, thousands of trucks are waiting at the Sarp border gate to cross into Georgia. Flights to Batumi and Tbilisi have been suspended. Turks in Georgia are returning to Turkey," he said.
Erkin is also cautious about Russia. "Turkish-Russian relations should be kept friendly," he says. "The trade volume between Turkey and Russia is expected to reach $38 billion this year. Any kind of indication showing Turkey favors Georgia may easily harm Turkish-Russian relations," he warned. He suggested that Turkey remain neutral in this conflict. "If Turkey wants to help Georgia, this can be done by providing humanitarian aid to Abkhazia and South Ossetia; otherwise, Russian-Turkish relations could suffer significantly," he added.Giorgi Chelidze, the general secretary of the Georgian Embassy in Ankara, tried to play down the damage the conflict could inflict on trade relations between Turkey and Georgia. Speaking to Today's Zaman via phone, he said, "This will not negatively affect Turkish businesses in Georgia." He went on to say: "Because our president is an optimist, he has suggested a cease-fire agreement to Russia. He wants to end this conflict as soon as possible. Not many things have changed, and the conflict is going to end soon, I think."
