Economic Benefits of Armenian-Iranian Relations and Their Torpedoing

Oil and financial sanctions imposed on Iran are likely to be lifted in the first three months of 2016- Bloomberg reported with reference to the western diplomats. According to the agency report, the International Atomic Energy Agency (IAEA) is expected to complete monitoring of Iran’s nuclear facilities in January-February, whereas the final decision will be presumably passed no later than end of March 2016.

Lifting sanctions on Iran should be very favorable to Armenia.

Firstly, the overall situation in the region is going to improve.
Secondly, considering the friendly relations between the two countries, Armenia can become a kind of threshold before Iran. It will be difficult for the western companies to adjust to Iran’s realities, they can use the experience that Armenians have gained both, in Armenia and Iran, to establish commercial and economic relations with this country.
Thirdly, being the EEU member, Armenia, which directly borders Iran, can provide the Eurasian Union members with favorable commercial and economic conditions with this country.

Apart from the aforesaid three circumstances, the major projects, such as construction of Armenia-Iran railway and transit of Iranian gas to Europe, can be launched.

According to the Armenian and Austrian companies’ studies, it may take 5 years to construct the proposed railway and its’ cost may amount to about US$ 1,7-2,8 bln.

Ruben Safrastyan, professor, Director of the Institute of Oriental Studies of the National Academy of Sciences of Armenia, believes that such projects, that require billions of investments, cannot be settled in a day. It is difficult to predict the probability of implementation of the railway project in view of the fact that one should take into account not only the interests of Armenia and Iran, but also the interests of the larger stakeholders – both regional and global. ‘In this case, the interests of Russia, China and, to some extent, Europe, are taken into account.’

In his opinion, one cannot tell for sure at this stage, that the USA is going changing its policy with regard to Iran. It is likely that the sanctions will be first softened and then lifted completely within the next few years. However, it should be also taken into consideration that the USA do not like that Iran is, to a great extent, independent in its foreign policy course. Lifting sanctions on Iran is beneficial to Russia and the countries of the Shanghai Agreement for further intensification and expansion of their cooperation.

Armenia has no access to the sea and land routes are rather limited due to the blockade by Turkey and Azerbaijan, which leads to increase in transport tariffs and prevents the country’s development.
A new land route for Armenia may be of crucial importance for country’s development and raising competitiveness of its economy.

Today, Armenia carries out trade with the outer world through the Black Sea ports of Georgia, partly through the Upper Lars rail and motorway, as well as through the highway connecting Armenia with Iran. Under such circumstances, the construction of Armenia-Iran railway can play a strategically important role both, for mining and metallurgical industry and for expansion of Armenia’s transit capabilities, as well as for entering the Middle East and Central Asia market.
Theoretically, it should work in Russia’s favor, if Armenia, as its strategic partner, becomes more stable and stronger. Armenia is the EAEC member and intensification of the economic ties with Iran will be ultimately beneficial to the entire Eurasian Union.

However, in a real sense, this benefit can be brought to naught in view of the commercial interests of that very Russia. It is less likely that Russia will be glad if Iranian gas becomes its competitor at the European market.
According to Armen Vardanyan, expert of the Armenian Institute of International and Security Affairs (AIISA), the head of Iran Program, a prospect of cooperation between the West and Iran will reduce European countries’ dependence on the Russian gas.

‘Armenia should spare no efforts to become a transit country for Iranian gas on its way to Europe’ – said Vardanyan, adding that under such scenario, Armenia may increase its influence in the region and raise the level of country’s security.
Otherwise, another energy project will bypass Armenia and will further isolate it from the world – the expert assumes.

Ruben Mehrabyan, political scientist, expert of the Armenian Center for Political and International Studies, believes that transit of Iranian gas through Armenia does not fit in ‘Gasprom”s strategy in Armenia: ‘It does not fit in Russia’s policy in Armenia. It is diametrically opposite to the gas prices, that Russia pursues in Armenia. Russia will do its best to prevent gas transit through Armenia in order to avoid violation of “Gasprom’s monopoly.

There have been reports, that Azerbaijan and Iran are discussing possible export of Iranian gas to Europe via Azerbaijan. The latter has even offered its infrastructure for oil and gas export to the world markets, as well as its gas storage facilities. According to Mehrabian, Russia may agree to such a solution, since it has absolutely different levers of influence on Azerbaijan.

However, the political expert believes, Russia will do its bets to ensure that Iran, as a major competitor in Eurasia for its oil and gas reserves, has maximum problems entering the world market, especially through the Caucasus.
‘If there is a violation of the monopoly positions of the Russian state corporations, that are not business entities, but rather the organized crime groups, that means that our country can serve as the economic basis for changing the economic system, too. It is not just gas, but also corruption, crime, oligarchy, merging of business and politics, that gets to Armenia through the ‘Gasprom’ pipelines. The political scientist believes, many “circles in Armenia may obstruct this policy of Russia.