"Tehran is watching closely." What will happen to cargo transportation from Iran to Armenia

For three weeks already, Azerbaijani police and customs checkpoints are operating on the section of the road between the Armenian cities of Goris and Kapan, thus slowing down cargo transportation from Iran to Armenia. There is a section of the route that came under the control of Azerbaijan after the second Karabakh war.

Azerbaijani customs officers stop Iranian trucks on the Vorotan section of the Goris-Kapan road and demand payment of customs duties “for crossing the border with Azerbaijan”. Customs posts, according to the official report of Azerbaijan, appeared due to the fact that “numerous incidents of entry of Iranian trucks into the part of Karabakh controlled by Russian peacekeepers have been established”.

The Armenian side faces serious economic problems, since 40% of the country’s trade turnover is carried out through Iran.

Tehran is actively discussing the issue with both Yerevan and Baku. But there is no final decision yet.

All the details – what is happening on the southern border of Armenia, how the country’s government intends to ensure the uninterrupted movement of Iranian trucks and expert opinion on the matter below.

• Customs payments for Iranian trucks: what is happening at the Armenian-Azerbaijani border
• Echo of the second Karabakh war: why Baku got the opportunity to blockade the south of Armenia

Tensions on the Goris-Kapan interstate road

After the fall of 2020, that is, the end of the second Karabakh war, the 21-kilometer section of the road between the Armenian cities of Goris and Kapan came under the control of Azerbaijan. The security of this section of the road has been ensured by Russian border guards since December.

The tension here began on August 25, 2021, when the Armed Forces of Azerbaijan blocked the road on the Karmrakar-Shurnukh-Goris-Vorotan section and opened it only two days later. Some Armenian villages became isolated and the Russian peacekeepers had to provide them with food during these days.

On September 12, the road closed again – this time to Iranian trucks. Near the village of Vorotan, the Azerbaijani side established posts, armed masked officers began to check the documents of the drivers of Iranian trucks and transported cargo, as well as demand the payment of customs duties.

On September 15, Azerbaijani police arrested two Iranian drivers under the pretext of “illegal entry into the territory of Azerbaijan”. Until now, nothing has been reported about their fate.

Is there a way out of the crisis?

The situation on the Goris-Kapan road has returned to the agenda the issue of building alternative roads in the southern border region of Armenia – Syunik, which was discussed at the beginning of the year.

“We will start construction as soon as the weather conditions permit us”, said Minister of Territorial Administration Suren Papikyan, who now holds the post of Deputy Prime Minister, in February.

To bypass the Kapan-Goris highway, the government decided to build an alternative Kapan-Tatev road. Reconstruction of the Tatev-Aghvani section of this road (43 km long) began at the end of July.

“Tatev-Aghvani will be completed this year, all unpaved roads will be ready by winter, but the asphalt road, of course, will only be in the spring”, Deputy Prime Minister Suren Papikyan told Azatutyun (Freedom) radio.

The government plans to complete the construction of the Tatev-Aghvani road by the end of November.

Tatev-Aghvani or Tatev-Ltsen?

Along with the construction of the Tatev-Aghvani road, the Armenian government initiated the construction of another bypass route – Tatev-Ltsen. But the second highway will only be ready in the next year, 2022.

Moreover, the difference between the two bypass routes, which should become an alternative to the Goris-Kapan interstate road, is that Tatev-Aghvani is difficult to pass for trucks with trailers.

It turns out that many Iranian trucks will have to wait several more months or even a year before they can transport goods to Armenia without paying customs duties to Azerbaijan.

“Tehran is closely following the development of events”

The situation caused tension in Tehran’s relations with Baku, and the problem was discussed with the Armenian authorities.

In response to a request from the Armenian CivilNet publication, the Iranian Embassy in Armenia stated that Tehran is closely following developments in the region in recent months, in particular, the situation with Iranian cargo trucks:

“Development of relations with friendly Armenia and removal of road obstacles and problems are on the agenda”.

The situation on the Goris-Kapan road was discussed during the summit meetings. On September 17, in Dushanbe, the heads of Armenia and Iran discussed, among others, “the issue of organization of uninterrupted cargo transportation between the two countries”.

According to Iranian news agencies, President Raisi announced that an Armenian-Iranian working group would be set up for “energy exchange, transportation and joint production”. According to the same source, Nikol Pashinyan welcomed “Iran’s initiatives to resolve existing problems”.

On September 24, in New York, within the framework of the 76th session of the UN General Assembly, a meeting was held between the Foreign Ministers of Armenia and Iran, who discussed “challenges for transport transit from Iran to Armenia and ways to overcome them”.

Iranian Ambassador Abbas Badakhshan Zokhuri periodically discusses the situation with the Armenian authorities. In recent weeks, he met with the Speaker of the Parliament, the Secretary of the Security Council, the Foreign Minister and one of the Deputy Prime Ministers. It is reported that during these meetings, the deepening of economic cooperation and the prospect of increasing trade turnover to $ 1 billion a year were discussed.

Expert opinion

What steps will Iran take?

According to Iran expert Garik Misakian, Iran is inclined to restore uninterrupted communication as soon as possible. In his opinion, judging by the statements of the Armenian and Iranian sides, one can assume that Iran is ready “to support the construction of an alternative road or take part in it”.

“Iran is not inclined towards the final closure of the Goris-Kapan road. In connection with this situation, many negative statements have already been made in Iran, even at the highest level”, says Garik Misakian, citing the arrest of two Iranian drivers as an example.

However, despite the tension that has arisen in the Iranian-Azerbaijani relations, according to Misakian, Tehran will not take any steps until the Armenian side has yet expressed its official position:

“The Iranian side has neither the tools nor the desire to interfere in this issue or solve it in favor of Armenia”.

Garik Misakian believes that Iran will first do what proceeds from its national interests, security and economic issues and will wait for Armenia’s position:

“If the Armenian side agrees to transfer control over this section of the road to Azerbaijan, Iran will accept it. If the Armenian side starts any process of returning or joint exploitation of this section of the road, Iran will adjust its policy accordingly, since it cannot interfere in the Armenian-Azerbaijani relations. At this stage, it seems that Iran supports the Armenian side”.

Armenia’s losses

Collecting customs duties on Iranian truck drivers on the Goris-Kapan interstate road could have serious economic consequences for Armenia. For three weeks now, economists and the opposition have been talking about the need for the country’s authorities to resolve this issue.

However, the government does not share their concerns. In particular, Minister of Economy Vahan Kerobyan told reporters that he does not see any big problems:

“Yes, there is an obstacle that I am sure we will overcome in the near future”.

Economist Suren Parsyan believes that Armenia’s foreign trade turnover with Iran is about $410 million a year.

Armenia exports $ 90 million (electricity, which accounts for 80% of exports, meat products and timber) and imports $ 320 million from Iran (gas, oil products, fertilizers, construction materials). And all transportation is carried out by Iranian trucks.

“Armenia very often uses the territory of Iran both for import and export of goods to Arab and Asian countries. If the road issue is not resolved, Armenian goods will become more expensive and lose their competitiveness in the international market, be it the UAE, Iran, China, India or any other country”, says the economist.

Suren Parsyan considers it necessary to reduce risks, otherwise the current situation will affect the economic activity of Armenia in general and the volume of exports – with all the ensuing consequences.

According to the economist, the Tatev-Aghvani road under construction is a temporary solution: even if the road is widened, it will be difficult to pass and ensure the same volume of cargo transportation:

“The only long-term solution will be the construction of the Sisian-Agarak road within the framework of the North-South project”.

With the North-South highway, Armenia can become a transit country. From the north, it will connect Armenia with Georgia and provide access to the Black Sea and European countries. From the south, the highway will connect the country with Iran. The road began to be built in 2012, it was planned to put it into operation in 2019, but so far only about 20% have been built. In 2021, the European Union announced that it will provide 600 million euros for the construction of the most difficult sections of the highway.

Suren Parsyan notes that, according to the draft state budget, the work will begin at the end of next year. Moreover, first it will be necessary to carry out design work, and the construction itself may take another 2-3 years.