The Government of Georgia has decided to terminate its contract with the Anaklia Development Consortium, Deputy Prime-Minister, Minister of Regional Development and Infrastructure, Maia Tskitishvili told reporters on January 9, noting that new tender documents will be prepared for Anaklia deep sea port construction.

As she stated the Consortium failed to replenish its capital with USD 120 million and to attract a USD 400 million loan from international banks.

She also touched upon the investigation against Mamuka Khazaradze and Badri Japaridze, main partners of the Anaklia Development Consortium, citing “insufficient guarantees” provided by the Consortium to the banks rather than the investigation process as the reason behind the investors’ refusal to finance the project.

Former senior analyst for Russian domestic politics in the U.S. State Department’s Bureau of Intelligence and Research, senior fellow in Carnegie’s Russia and Eurasia Program, Paul Stronski said that the Georgian government’s decision is a big blow to the country’s reputation as a stable place to do business.

“It also is a big blow to American and European investors. It would have given direct shipping access to Europe and other outside markets. In addition, it will impede the Chinese efforts to skirt Russia in its Belt and Road Initiative to connect China with Europe through Central Asia and the Caucasus. Much of the infrastructure to complete China’s dream of the BRI is already done (Baku-Tbilisi-Kars) in the Caucasus. Anaklia would have given another port option. The decision slows all this down,” Stronski told the Accent.

When asked, whether the government’s decision was politically motivated, Stronski said: “Much of the decision appears to be due to internal domestic squabbling and political reasons, so this certainly undermines the investor climate.”

“I have heard the criticism that the Georgian government has not backed the project enough to international investors. But, the decision certainly looks like there is political motivation behind it. Georgia has long presented itself to investors as a safe place to do business and set up shop for regional operations. this decision doesn’t help Georgia’s reputation as a center for regional business operations,” he added.

The Anaklia Development Consortium commented on the government’s decision later on January 9. Levan Akhvlediani, Consortium’s Director General said they would take the Georgian government to international court over the termination of the contract.

Anaklia Deep Sea Port project has strong backing from the U.S.

In June 2019, U.S. Secretary of State Mike Pompeo said following the meeting with Mamuka Bakhtadze, then Prime Minister of Georgia:

"Finally, I communicated our hope that Georgia completes the port project. The project and others will enhance Georgia’s relationship with free economies and prevent Georgia from falling prey to Russian or Chinese economic influence. Those pretended friends do not have Georgia’s best interests at heart."