Highway blocked by Russians key for Georgia economy

TBILISI (Reuters) - The blocking of Georgia's main east-west highway by Russian soldiers for nearly a week threatens the economic viability of the poor Black Sea nation, ministers and analysts say.

Lorries with foreign number plates normally compete with local goods trucks and battered private cars for space on the road between the capital Tbilisi and the ports of Poti and Batumi.

But since last Wednesday Russian soldiers with Kalashnikov rifles have guarded checkpoints on the road and camouflaged tanks in fields have trained their cannons on nearby hills.

"It will have a very serious impact on the economy," Georgian Prime Minister Lado Gurgenidze told Reuters when asked about the fallout of a prolonged Russian blockade of the road.

The well-paved road is the main route across the mountainous former Soviet state. It also links Georgia's Black Sea ports with Baku, capital of energy-rich Azerbaijan on the Caspian Sea some 1,000 km (700 miles) away.

Bypassing the Russian checkpoints via the narrow, rough and steep roads of southern Georgia is barely an option for cars and simply not possible for lorries, said Georgia's first deputy economics minister, Vakhtang Lezhava.

Trade volumes between Tbilisi and the Black Sea have dropped by some 95 percent since the road was blocked, he said.

The conflict between Georgia and its former overlord Russia erupted after Tbilisi tried to recapture the Moscow-backed separatist region of South Ossetia. This provoked a huge Russian counter-attack that has shaken ties between Moscow and the West.

Last Wednesday after the Georgian army retreated, the Russian army moved unimpeded into the town of Gori about 30 kilometers (22 miles) outside South Ossetia and then set up checkpoints along the main highway around 80 km from Tbilisi.

"BACKBONE"

"The highway is the backbone of Georgia's economic infrastructure. Blocking this route is like smashing the backbone of the country," said Lezhava.

Georgia, a nation of around 4.5 million people at the heart of the Caucasus, earns valuable income as a transit route, including for oil and natural gas from the Caspian basin.

A major pipeline pumps oil from the Caspian Sea to Europe and a railway carries goods across the region. The pipeline is operating but the Russians have blown up a bridge on the railway destroying that route.

The highway also creates revenues for towns which have grown up around it, said Lawrence Sheets, senior analyst on the south Caucasus at the Brussels-based International Crisis Group.

"The road is vitally important to Georgia. The civil administration in the west (of Georgia) will be under pressure," he said. "If you disrupt that road then you disrupt everything."

Georgian President Mikheil Saakashvili has presided over strong economic growth since sweeping to power in 2003 but has angered Russia by building close security ties with the United States and lobbying for NATO and European Union membership.

Even if the Russians return to positions laid out under an EU-brokered ceasefire, Georgia's image as a transport route between Europe and Asia has been dented, said Svante Cornell of the Stockholm-based Institute for Security and Development Policies.

"The West had succeeded in opening an east-west transit corridor. That corridor is now under Russian control, he said."

(Editing by Gareth Jones and Jon Boyle)