VZCZCXRO3339
RR RUEHDBU RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHSI #0263/01 0401442
ZNY CCCCC ZZH
R 091442Z FEB 07
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC 5311
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC

C O N F I D E N T I A L SECTION 01 OF 02 TBILISI 000263 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR EUR/CARC AND EB/ESC/IEC 
 
E.O. 12958: DECL: 02/28/2017 
TAGS: ENRG PREL GG TU AJ
SUBJECT: SOUTH CAUCASUS SUMMIT ENERGY RESULTS DISAPPOINT 
GEORGIA 
 
REF: TBILISI 240 
 
Classified By: Ambassador John F. Tefft, reason 1.4(b) and (d) 
 
¶1. (C) Summary: IN a February 8 meeting with DCM Mark X. 
Perry, Valeri Chechelashvili, Deputy Minister of Foreign 
Affairs of Georgia expressed strong disappointment that the 
February 7 meeting of Turkish Prime Minister Recep Erdogan, 
Azerbaijani President Ilham Aliyev and Georgian President 
Saakashvili, along with meetings of Energy and Trade 
Ministers of the three countries, did not produce better 
results in terms of securing gas supplies for Georgia. 
Turkey insisted on supplying its promised gas before July 1, 
2007, and pushed for ambiguous language about securing the 
rights of the Turkish oil company BOTAS.  The three countries 
finalized an agreement for constructing the Kars-Baku 
railway, despite some Georgian reservations about its impact 
on its Black Sea ports and relations with Armenia.  The 
leaders' meeting resulted in "The Tbilisi Declaration on a 
Common Vision for Regional Cooperation" that is long on 
generalities and short on specifics.  End Summary. 
 
¶2.  (C) During the meeting, Saakashvili, Erdogan and Aliyev 
signed an agreement confirming construction of the 
Kars-Akhalkalaki-Baku railway (reftel).  Chechelashvili said 
the project was signed by Georgia despite the GOG's concerns 
about the impacts on Georgia's Black Sea ports.  The project 
is important to Georgia's number one and two trade partners, 
Turkey and Azerbaijan, and so it will go forward, he said. 
Georgia is well aware of Armenia's opposition to the project, 
and before the deal was signed, Minister of Foreign Affairs 
Bezhuashvili talked to the Armenian Foreign Minister to allay 
his fears.  President Saakashvili publicly mentioned 
Georgia's interest in good relations with Armenia in the 
presence of both Erdogan and Aliyev, Chechelashvili said. 
Saakashvili was quoted in reports of the event as saying 
Georgia does not want any country of the region to be 
isolated from regional cooperation.  Chechelashvili said that 
Georgia wants to do what it can to help Armenia have 
transport capacity.  For the past year, Georgia has allowed 
Armenian trucks to use its roads free of transit fees, 
although this gesture lost importance when the Russians 
closed the only legal border crossing into Russia in 
mid-2006.  Armenia has reciprocated for Georgian truckers but 
free transit through Armenia is not especially useful to 
Georgia, Chechelashvili said.  The GOG hopes the project will 
have positive impact on the impoverished region of 
Samskhe-Javakheti, where many Armenian people live.  The 
exchange facility from European to CIS gauge railroad track 
is located in the region and will create jobs.  Improved 
electricity connections to Turkey are expected to help the 
area as well.  Chechelashvili mentioned the $200 million, 25 
year, 1% interest loan with no state guarantee required that 
Azerbaijan is providing to Georgia to fund the railroad 
project. 
 
¶3.  (C) Chechelashvili was deeply disappointed in the Turkish 
approach to the energy problems in the region.  He said that 
Turkey had essentially repudiated its promise to supply gas 
to Georgia in 2007 by attaching conditions to it that make it 
useless to Georgia.  He said that in preparatory meetings, 
Turkish Energy Ministry staff presented proposed language for 
the declaration that the Georgians found acceptable. 
However, during the meeting of the Energy Ministers in 
Tbilisi, Turkish Minister Guler pulled that version and, with 
the help of a stern and uncooperative representative of BOTAS 
attending the meeting, wrote a new one.  Guler's new version 
called for "securing the interests of BOTAS" and would 
postpone commencement of Turkey's obligation to take Shah 
Deniz gas until July. 
 
¶4. (U) This new language was not agreed to and the 
Declaration states: 
 
"Together, we agree to establish long-term and predictable 
mechanisms that ensure the energy security of all three 
nations through the reliable, timely and commercially based 
provison of gas and electricity based on the infrastructure 
projects referenced herein. (Note: This refers to the 
Baku-Ceyhan, Baku-Supsa and Shah Deniz pipelines.)  Taking 
into consideration the energy needs of our countries we 
appreciate the start of exploitation of Shahdeniz (sic) gas 
condensed field located in the Azerbgijan sector of the 
Caspian Sea.  We agree to continue to cooperate in order to 
meet mutual needs for reliable and sustainable gas supplies." 
 
¶5. (C)  Chechelashvili said that forcing Georgia to receive 
its gas before July 1 is useless to Georgia, since it has no 
 
TBILISI 00000263  002 OF 002 
 
 
storage capability and no real need for gas in the summer. 
He said the economic shock of the increase in the price of 
Russian gas will impact Georgia most strongly in 2007 and by 
next year the economy will have adjusted for the most part. 
Also, more hydropower capacity will be coming on line over 
the next few years, reducing the need for gas. 
Chechelashvili said he got the feeling that Turkey simply did 
not want to share its Shah Deniz gas, and that Georgia had 
been wasting its time in negotiations with the Turks since 
October or November.  As a result, Georgia will have to plan 
for continued reliance on Russian gas for the next three or 
four years.  In his opinion, the Turks' short-term object is 
simply to avoid penalties for being unable to receive gas 
before July 1.  He added that the Turk's negotiator, a Mr. 
Uman (possibly Resit Uman) admitted that the GOT is under 
pressure from Russia has to take its interests into account. 
Chechelashvili felt that the way the Tbilisi meeting and 
negotiations were handled by Turkey indicates that Erdogan's 
political capacity is more limited than previously thought. 
 
¶6.  (C) Asked what support Azerbaijan had given Georgia in 
the discussions with Turkey, Chechelashvili said they had 
been helpful.  Apparently this was not sufficient to 
influence the Turks, however. 
 
¶7.  (U) Chechelashvili said there was no detailed discussion 
of free trade with Turkey but he fears that achieving an FTA 
may become more difficult.  The Declaration announces 
agreement to support construction of a new electicity 
transmission line from Azerbaijan, through Georgia and into 
Turkey. 
TEFFT