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Electricity Cooperation Opportunities in the South Caucasus: The Role of Georgia

bMs. Tamar Tsurtsumia - 30 July 2015

Electricity in South Caucasus

Following the disintegration of the Soviet Union, the newly independent South Caucasus states experienced an impressive deterioration in the economic and social sectors. Unresolved territorial conflicts such as Nagorno-Karabakh, Abkhazia and South Ossetia, as well as the wider insecurity of the region, have resulted in internal instability and economic depressions. Due to political conflicts, civil opposition and blockades, the South Caucasus region became a challenging area for trade, and this affected all areas of the economy including energy. The energy markets of the South Caucasus states, which were part of the unified Trans-Caucasus energy system during the Soviet era, broke down and energy supply became extremely vulnerable.

Opportunities for cooperation have been focused on the energy resources of the Caspian Sea and the role of the South Caucasus as both a source-rich area and a transit corridor for transportation of hydrocarbons to Europe.

It is important to note that Georgia, Azerbaijan, Turkey and Armenia are contracting parties to the Energy Charter Treaty (ECT). The ECT, with its large constituency, aims to encourage and facilitate international energy cooperation. Its key principles of openness of energy markets and non-discrimination have the potential to stimulate foreign direct investment and cross-border trade.

The International Energy Charter is a new political declaration adopted on 20-21 May 2015 which widens the scope of the original European Energy Charter to a global level. Given the globalisation of the energy market and the prevailing turbulence in the world’s economy, geopolitics and demography, the new International Energy Charter, with its present support from 75 countries (coming from five continents), is an important tool to help secure required energy investments.


The contents of this work are the author's sole responsibility. They do not necessarily represent the views of the Energy Charter Secretariat or any members of the Energy Charter Treaty.