EurasiaNet Organization
March 3 2005
ARMENIA WIDENS TIES WITH IRAN AS U.S. ATTACK LOOMS
Emil Danielyan 3/03/05
Seeking to ease its economic isolation, Armenia is expanding trade
contacts with Iran. Work on a variety of infrastructure projects,
including an Armenian-Iranian pipeline, is proceeding amid
uncertainty. Armenian officials’ main worry is that mounting
US-Iranian tension over Tehran’s nuclear program will disrupt the
projects.
Armenian President Robert Kocharian issued guidelines in late
February for the construction of a new highway designed to foster a
rapid expansion of trade between Armenia and Iran. The launch of the
highway project came amid continuing construction of the pipeline, as
well as of yet another power transmission line.
Work on the highway, which will run through Armenia’s mountainous
southeastern Syunik province bordering Iran, is scheduled to start in
April and finish in late 2006. The estimated $20 million cost makes
the highway the largest single infrastructure project undertaken by
the government since the country regained its independence in 1991.
The sole existing road link between Armenia and Iran meanders through
a high-altitude mountain pass in Syunik that is often closed in
winter. Transport and Communications Minister Andranik Manukian says
the new highway will always be passable and will be able to
accommodate heavier trucks.
The road should go into service by the time the Armenian side
completes work on its section of the 120-kilometer gas pipeline. Work
on the pipeline began last November following a high-profile official
ceremony led by Armenian Prime Minister Andranik Markarian and
Iranian Energy Minister Habibollah Bitaraf. The two men also
inaugurated a second high-voltage transmission line connecting their
countries’ power grids. Two days later, Bitaraf and his Armenian
counterpart, Armen Movsisian, signed an agreement in Yerevan on
building a third such line, which they said would have twice the
carrying capacity as the existing lines.
Armenia is financing both the pipeline and electricity projects with
Iranian loans totaling about $64 million. Yerevan will repay them
with electricity supplies. In addition, the two sides have agreed to
look into the possibility of building an Armenian-Iranian railway.
Economic ties with Iran are deemed vital for land-locked Armenia, as
they mitigate the effects of economic blockades maintained by
Azerbaijan and Turkey, as a result of the unresolved Nagorno-Karabakh
conflict. [For background see the Eurasia Insight archive].
Many Azerbaijanis view Iran’s refusal to join those blockades as a
sign that Tehran favors Yerevan. Visiting Iran in January,
Azerbaijani President Ilham Aliyev publicly urged the Iranians to
show solidarity with fellow Shi’a Muslims and exert “economic
pressure” on Armenia. [For additional information see the Eurasia
Insight archive].
The Iranian government does not seem inclined to heed Aliyev’s
appeal, however. Analysts in Yerevan have long suggested that
Tehran’s main motive for maintaining close links with its sole
Christian neighbor is to limit the spread of Turkish influence in the
region.
“The relationship between the Armenian and Iranian peoples can serve
as the best example for all those who want to live side by side and
respect each other’s sovereignty,” Iranian President Mohammad Khatami
declared during an official visit to Yerevan last September.
Keeping Armenian-Iranian relations on track may prove difficult for
Kocharian’s government in the light of the recent upsurge in
US-Iranian tension. [For background see the Eurasia Insight archive].
“We very much hope that problems in American-Iranian relations will
be settled by peaceful means,” Armenia’s influential Defense Minister
Serge Sarkisian said after a recent visit to Tehran where he met with
virtually every Iranian leader. Sarkisian was at pains to stress that
the talks focused on economic issues and that “we have no military
cooperation with Iran.”
Tevan Poghosian, director of the International Center for Human
Development, a Yerevan-based think-tank, believes that the Armenian
leadership does have cause for concern. “We will have serious
problems if the Americans fail to find diplomatic solutions [to the
nuclear dispute],” he says. “If they don’t, the Armenian-Iranian
projects will simply be frozen indefinitely.”
Other observers believe the importance of trade ties with Iran should
not be overestimated in Armenia. “They are certainly not a miracle
cure to resolve the Azerbaijani and Turkish blockades,” a senior
member of the Western donor community in Yerevan told EurasiaNet.
“The Iranian economy itself isn’t exactly healthy.”
Indeed, Iran was a leading trading partner of Armenia in the 1990s,
but Tehran’s share of Yerevan’s overall foreign trade activity has
declined dramatically in recent years, standing at a modest 5 percent
in 2004. The volume of bilateral trade totaled almost $100 million.
That figure is roughly the same as the trade volume between Armenia
and Turkey, according to unofficial estimates. Virtually all
Armenian-Turkish trade is conducted via third countries, especially
Georgia, as Yerevan and Ankara have not normalized diplomatic
relations, and Turkey keeps its frontier with Armenia closed. [For
background see the Eurasia Insight archive].
Growth in Armenian-Iranian trade is hampered by the poor quality of
Iranian consumer goods, as well as prohibitive import tariffs that
hinder Armenian manufacturers from entering Iran’s huge market.
Still, according to Poghosian, Yerevan is keenly interested in the
success of the pipeline project with Iran, hoping that it will reduce
Armenia’s energy and power dependence on Russia. Moscow currently
controls about 80 percent of Armenia’s power-generating facilities
and is its sole supplier of natural gas. “Armenia is looking for an
alternative way of meeting its energy needs,” Poghosian said. “I
don’t think the Russians are happy with this policy.”
Editor’s Note: Emil Danielyan is a Yerevan-based journalist and
political analyst.