ARMENIAN AND RUSSIAN PRESIDENTS EXPLORE RAILWAY LINKS VIA IRAN
by Natalia Leshchenko

World Market Research Centre
Global Insight
September 3, 2008

Armenian President Serzh Sargsyan is visiting his Russian counterpart
Dmitry Medvedev to discuss bilateral relations in the minds of the
Russia-Georgia crisis. The military hostilities gave a new lease of
life to the Iran-Armenia railway project. First introduced in 2006,
it was dismissed over the high estimated cost, $1US.5 billion, but
is back on the table now as diplomatic relations between Russia and
Georgia are cut off. The chance of bypassing Georgia for Russia’s gas
deliveries to Armenia is small at the moment, with the possibility
of building an Iran-Armenia gas pipeline branch only mentioned. The
price for gas deliveries over 2009-2011, was not discussed, according
to Medvedev’s aide.

Significance:Armenia has felt the effects of the military operation
in Georgia this August, particularly in the form of fuel shortages,
and its president, only elected this year and still facing street
opposition, is keen to assure economic stability and prosperity in the
country as a bedrock of his authority. Russian railway monopoly RZhD
already owns Armenia’s railway network as an affiliate company, and
is most likely to take charge of the Iran-Armenia railway, although a
source of funds would have to be found for such a costly project. One
may also wonder if the need to bypass Georgia for Russia-Armenia trade
may be pertinent and long-term enough to justify an expensive railway.