YEREVAN AND TEHRAN STRENGTHEN ECONOMIC COOPERATION
By: Emil Danielyan
Jamestown Foundation
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April 29 2009
Armenia and Iran have agreed to deepen their already close relationship
by pressing ahead with several large-scale commercial projects, mostly
related to energy supplies. The two neighboring states formalized these
plans during Armenian President Serzh Sarksyan’s recent official visit
to Tehran. Iranian leaders used the trip to reaffirm, in unusually
strong terms, their commitment to enhance political and economic
cooperation with Yerevan.
"The Iranian government and nation have enthusiastically welcomed the
expansion of amicable ties with the Armenian nation and government,"
Iran’s Supreme Leader Ayatollah Ali Khamenei said on April 14 as he
received Sarksyan and Iranian President Mahmoud Ahmedinejad after
their two-day negotiations (IRNA news agency, April 14).
Speaking at a joint news conference with his Armenian counterpart
earlier that day, Ahmedinejad described those ties as "very
deep-rooted, friendly and developing" and predicted a "very bright
and promising" future for them. "Throughout their history the two
nations have always trusted each other and enjoyed amicable ties,"
he said. "We are going to broaden our cooperation at regional and
international levels," Ahmedinejad added, according to the official
Iranian news agency.
The two presidents spoke to journalists after signing eight
Armenian-Iranian memorandums of understanding. The most significant
of those agreements fleshed out an ambitious idea to construct a
railroad connecting the two countries -which will transform Armenia’s
transport and communications links with the outside world. The lack of
such a rail link is considered a major hindrance to the development of
Armenian-Iranian trade, which amounted to a modest $226.6 million in
2008. It also complicates the use of Iranian territory and accessing
the Persian Gulf ports.
According to the two governments, the 470-kilometer railroad, with the
bulk of it passing through Armenian territory, will cost between $1.2
billion and $1.8 billion and take at least three years to build. The
Armenian Transport and Communications Minister Gurgen Sargsian revealed
on April 20 that Iran will allocate a $400 million loan to Armenia for
the planned railroad construction. Yerevan hopes to attract the rest
of the necessary funding from international lending institutions and,
in particular, the World Bank and the Asian Development Bank (ADB). The
ADB provided $1.5 million last fall for the first feasibility studies
on the project. A delegation of the Manila-based bank is scheduled
to visit Yerevan in May for further talks. Speaking on the eve of his
visit to Iran, Sarksyan said that work on the railroad will start in
2010 at the latest (, April 10).
Another agreement signed in Tehran, envisages the construction of two
large hydro-electric plants on the river Aras on the Armenian-Iranian
border. The Armenian Energy Minister Armen Movsisian told journalists
that they will be built by Iranian companies and that Armenia will
finance its share of the $240 million project with electricity
supplies to Iran (Arminfo, April 17). It remains unclear however,
as to precisely when the construction will begin.
The two sides also formally agreed to start building a 300 kilometer
pipeline to deliver petrol and diesel fuel from an oil refinery in
northern Iran to Armenia. In December 2008 another pipeline project
was inaugurated, which is designed to pump up to 2.5 billion cubic
meters of Iranian natural gas to Armenia. With Russian gas already
meeting Armenia’s domestic energy needs, the bulk of Iranian gas is
expected to be used for producing electricity, which will then be
exported to Iran. Two of Armenia’s three thermal power plants are
currently undergoing a multimillion-dollar reconstruction -which may
explain why Iranian gas deliveries have yet to start. Large-scale
Armenian electricity exports also require the construction of a third
and much more powerful high-voltage transmission line linking the
Armenian and Iranian power grids. According to Movsisian, it will
start in May and take at least two years.
The Armenian-Iranian agreements underscored just how far the Islamic
Republic has gone in cooperating with its sole Christian neighbor
since the collapse of the Soviet Union. Despite sharing a religious
affinity with fellow Shia Muslim Azerbaijan and periodically signing
statements by Islamic nations denouncing "Armenian aggression,"
Iran has essentially maintained neutrality in the conflict over
Karabakh. Not only has it refused to join the Azerbaijan’s and Turkey’s
economic embargo of Armenia, but it has actually helped the latter
to mitigate the adverse affects of these sanctions. "An advanced
and developed Armenia will be beneficial to the entire region,"
Ahmedinejad was reported to tell Sarksyan (Iranian Press TV, April 13).
This stance, seen as "pro-Armenian" by many in Azerbaijan, is at
odds with the notion that religion is the main driving force behind
Iranian foreign policy. "That does not mean Islam plays no role in
Iran’s foreign policy," said Arax Pashayan, an Islamic expert at the
Institute of Oriental Studies of the Armenian National Academy of
Sciences. "It is just that in its relations with Armenia, Iran does
not use the religious factor and is solely guided by its national
interests" (Interview with EDM, April 27). Limiting the Turkish
influence in the region has clearly been among those interests -a
goal shared by Armenia.
In Armenia, maintaining a warm rapport with its large Muslim neighbor
and one of its few commercial conduits to the outside world is a
rare issue of national consensus. Armenia’s leadership uses every
opportunity to praise Iran’s "balanced" position on the Karabakh
conflict and showcase its support for closer Armenian-Iranian
ties. "Armenia attaches special importance to the dynamic expansion
of relations with Iran," Sarksyan was quoted by his press office as
saying in Tehran on April 13. From Yerevan’s perspective, that will
also significantly benefit the Armenian energy sector and somewhat
offset the country’s exclusion from regional energy projects led by
either Azerbaijan or Turkey.
From: Emil Lazarian | Ararat NewsPress
