Connectivity, Trade and Financial Integration of the South Caucasus Via the Belt and Road Initiative (BRI)

Abstract

The lack of connectivity is one of the impediments to progress for Armenia, Azerbaijan and Georgia - the countries of the South Caucasus (SC) region. Due to open conflicts and political tensions, cooperation between the three has been extremely difficult. However, there are examples of positive bilateral cooperation, mostly in infrastructure-related projects, as all three countries are trying to attract more foreign direct investment (FDI) and cargo, to enhance trade relations and to diversify their trading partners. Thus, it is no surprise that countries in the SC have expressed interest in participating in China's Belt and Road Initiative. The initiative may lead to improved cross-country coordination, and the countries in the SC may eventually be able to harmonize their trade policies under one umbrella. Achieving both of these goals involves the development of soft infrastructure tools and building and improving a hard infrastructure. Soft infrastructure tools, such as well-established legal and regulatory frameworks, as well as a good hard infrastructure are much needed in the SC.