‘A New Iron Curtain’: Georgia-China Port Deal will ‘Have Immense Consequences for the Region’, Lawyer Suggests

Over the past 20 years, the name China Communications Construction Company (CCCC) has become almost synonymous with corruption. From Equatorial Guinea and Tanzania to Malaysia and the Philippines, the Chinese state-owned firm has fended off accusations of bribery, fraud, anti-competitive practices and predatory financing, which have previously seen it debarred by the World Bank as well as presently being blacklisted by the United States. 

According to the Georgian government, however, those sanctions simply don’t exist. “It’s a lie, international sanctions do not apply to this company,” the Ministry of the Economy has claimed. “We believe these unfounded allegations are part of a politicised campaign aimed at hindering the Anaklia port project.” 

Aimed at drastically expanding Georgia’s role as a transit point along the so-called ‘Middle Corridor’ trade route between Europe and Asia, plans to build Georgia’s first deep-water port on the Black Sea have a long and chequered history. But experts say the decision to partner with CCCC on the US$2.5 billion project represents the initiative’s most troubling development to date.

For Ted Jonas, an international business and environmental defence lawyer based in the Georgian capital of Tbilisi, who was previously involved in the port project, it was little coincidence the announcement fell on 29 May, just one day after the government faced down widespread international condemnation to pass a Kremlin-style law on ‘foreign influence‘. 

Decried as punitive and anti-democratic for targeting independent media and government-critical NGOs, these measures have effectively torched the South Caucasian country’s long-standing relations with the Euro-Atlantic community, representing as they have a climax to the staunch anti-Western rhetoric from Georgian officials that has mounted since Russia’s full-scale invasion of Ukraine. 

China’s ongoing support for the Putin regime amid the war has proven a source of concern for the US and the EU, as Chinese markets continue to provide a critical lifeline for Russia’s sanctioned economy.

Jonas says Georgia’s recent port deal with CCCC signals a decision to pick a side in the conflict by a country that had otherwise, historically, placed a heavy premium on “strategic ambiguity” since its own disastrous war with Moscow in 2008.

“The port deal is a concrete representation of [the Georgian government’s] anti-Western turn,” Jonas explains.

The foreign agent’s law is relatively abstract as it exists only on paper for now, but the port is a physical project – it will literally be like a new iron curtain, because there can now be no Western involvement in it at all

Ted Jonas, defence lawyer

The Anaklia Deep Water Port initiative was first floated in 2012 by Georgia’s pro-Western former President Mikheil Saakashvili, just months before his United National Movement government was ousted at the polls by Georgian Dream, the current ruling party. 

Georgian Dream had been founded earlier that year by billionaire businessman Bidzina Ivanishvili, who made his fortune in Moscow during the privatisation frenzy of the 1990s, and who has lately faced growing calls to be targeted with international sanctions for his control over domestic public life and longstanding ties to powerful Russian interests. 

In 2017, a consortium was set up between Georgia’s TBC Bank and US-based construction firm Conti International to initiate and oversee initial research and development for the deep water port project.

Two years later, then-US Secretary of State Mike Pompeo was praising the initiative for its promise to “increase Georgia’s relations with free economies” and, in words that have since proven ironic, to “prevent Georgia from being influenced by Russian and Chinese economies”.

But by that point the initiative had already begun to flounder, after TBC Bank founders Mamuka Kharazadze and Badri Japaridze were accused of money laundering by the Georgian government. Both men have denied the allegations, with Kharazadze claiming they were motivated by a desire to sabotage the port initiative owing to conflicts in his personal relationship with oligarch Ivanishvili. 

As a result of the charges, Conti International pulled out of the consortium, with the Georgian government winding down and eventually cancelling the project in 2020.

Rumours abounded that the Kremlin pressured Georgian Dream to put an end to the initiative, wary as Moscow was of US interests so close to its own port of Novorossiysk, some 600 km northwest of Anaklia. 

When war in Ukraine broke out in February 2022, a swift and significant decline in freight through Novorissiysk was keenly felt by Azerbaijan and Central Asian states like Kazakhstan and Uzbekistan. Amid the flocking to Georgia of concerned diplomats and officials eager to find a solution to the bottleneck, talk soon began to spread of reviving the ditched initiative. 

Though the names of the companies involved in the tender process remained unknown until the May 29 announcement, there were already signs of Chinese interest in the project.

In September 2023, the Chinese Ambassador to Georgia Zhou Qian had emphasised the importance of Anaklia for growing trade demand along the Middle Corridor, in comments that came just months after then-Prime Minister Garibashvili had upgraded Georgia’s relations with China to a “strategic partnership” during a diplomatic trip to Chengdu.

Lea Thome, an international security scholar with the Wilson Centre, explains that while many Western firms are subject to certain institutional constraints like workforce regulations, reputational risk and a fear of loss on investment, Chinese state entities are seldom subject to the same restrictions.

In practice, firms like CCCC are therefore able to turn development projects around at great speed, meaning that if all goes ahead as planned, the first stages of the Anaklia port initiative could be completed within the next three years. 

“It will have immense consequences for the region, promising to bring in more Chinese companies and more Chinese investment,” Thome says. “The Anaklia initiative was originally oriented toward the West, but with it now being known as a Chinese project part-owned by a sanctioned Chinese company, I think that will really shift the tone of the port, and how heavily it will be utilised by other countries.”

Jonas clarifies there’s no reason Western goods shouldn’t transit through a Chinese port, or that goods from China shouldn’t similarly go out from Anaklia into Western markets.

The concern, shared by many critics of the initiative, rests on the lack of scope for integrating Western services into the port, and the advantages this will afford not only Chinese companies but also, crucially, their customers in this corner of the Black Sea. 

“Because of the sanctions in place, there will be no Western financing or investment, there will be, in effect, no Western content to it at all,” Jonas explains. “Western countries cannot sell services to this company that’s going to build the port, so it’s an absolute block on any real involvement –  and if the Russians had a set of conditions they needed in order to be okay with this project, you can bet that was on the checklist.”