Friday, January 26, 2007

Rail Transportation

Rail links continue to be a topic of great interest. Rail transportation shrunk significantly over the past 16 years. On the eve of its independence in 1991, Armenia's railroads handled 12 million tons of freight (see here which also includes similar information on road and air transportation). In 2005, the last year for which data is available, it had dropped to about 2.6 million tons, with more than half of it foreign trade related. Similarly, the number of passengers traveling dropped from 3.5 million to 700,000.

Some of the above steep decline can be explained by the dissolution of the Soviet Union and the traditional markets and trading partners that Armenia had enjoyed. Some can be attributed to the instability in Georgia, particularly in its northern regions. But much should be attributed to the blockade by Turkey.

Indeed, the economic hardship could have been averted by employing rail lines (and roadways) heading west rather than north had it not been for the blockade by Turkey. This is not a trivial matter as the bulk of Armenia's trade is with the west, and not its immediate neighbors to the north and east. In 2005, less than 19 percent of its exports of USD 950 million were destined to Georgia, Russia, Ukraine, and the remaining former Soviet republics to its north and east. Similarly, about 21 percent of its imports of USD 1768 million originated from these countries.

If west is the way to go, then connecting to Kars in Eastern Turkey should be quite cost effective. As the map in my previous post shows, Kars is a stone's throw away from the Armenian border and already has rail links in place connecting the two countries. Open borders and trade are beneficial to Armenia. Undoubtedly, they are also beneficial to Turkey. Obviously economics has little to do with the decision to impose a blockade, which must have cost Armenia billions of dollars in lost economic activity over the past decade.

[March 10: Graph is replaced -- it disappeared again]

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