Armenia, Iran strengthen ties

Institute for War and Peace Reporting
Feb 24 2005


Yerevan defies Washington by strengthening strategic relationship
with Tehran.

By Karine Ter-Saakian in Yerevan

A visit this month to Iran by Armenia’s defence minister, Serzh
Sarkisian, has underlined the important strategic relationship
between the
two countries.

Overland trade may be decreasing between the two neighbours, but at
the same time more substantial economic relationships based on
investment projects are emerging.

Referring to a series of agreements, in particular one for a new gas
pipeline linking Iran with Armenia, Sarkisian said, “the presidents
of the two countries have laid the foundations for a new phase of
economic cooperation, and we must now make every effort to see that
agreements which have been reached are implemented as soon as

Only a few years ago, Iran was Armenia’s most important trading
partner. The relationship between the Islamic republic and the
state blossomed after the end of the Soviet Union, imports of goods
from with Iran helped Armenia survive the economic collapse caused by

the closure of its borders with Azerbaijan and Turkey as a result of
the Nagorny Karabakh war.

Iranian goods such as cheap consumer goods and household items are on

sale in shops and markets all over Armenia – and they are still
cheaper than their competitors.. Thirty-five Iranian firms have
offices in

Yet by 2003, Iran’s share of the Armenian import market had shrunk to

five per cent. Although the figures have improved since then and
trade between the two countries was worth 90 million dollars last
Iranian goods continue to be squeezed out of the market by Russian,
Ukrainian and Turkish products.

This is due in large part to the falling costs of trade via Georgia,
the route by which goods arrive from Turkey and the former Soviet
Union. On February 22, Armenian transport minister Andranik Manukian
said he hoped a new sea route would open up between the Georgian port
Poti and Russia, and that trade tariffs with Turkey would be reduced.

Trade with Iran will receive a boost from plans to build the Kajaran
tunnel, which will slice through the mountains near the
Iranian-Armenian border and cut the road to Yerevan by 80 km.

But the main growth area appears to be in longer-term projects rather

than trade. Yerevan and Tehran have signed a number of important
deals in the energy sector, including plans to build a series of
hydroelectric stations along the river Araxes that runs between the
countries, and there are solar and wind power projects in the offing.

“Energy is the driving force in Armenian-Iranian relations,” Armenian

president Robert Kocharian has said. “Other areas will follow behind

Most important of all is a pipeline which will bring Iranian gas to
Armenia. Construction started last year and the first stage should be

completed by 2007. The 140 km pipeline will cost up to 220 million
dollars. According to energy minister Armen Movsisian, “This is a way

for Armenia to diversify its energy supply routes.”

The Russian government – a long-term ally of Armenia – is supporting
the Iranian gas project, as President Vladimir Putin announced a few
days ago in discussions with the secretary of Iran’s Supreme National

Security Council Hasan Ruhani. And on a visit to Yerevan last week,
Russian foreign minister Sergei Lavrov said, “Russia would like to
the development of the energy, transport and other infrastructure in
the region.”

The Russian gas giant Gazprom which currently supplies gas to Armenia

has been more cautious about supporting what amounts to a rival
project. Gazprom’s deputy chairman Alexander Ryazanov said recently
thought the Russian firm should participate in the Iran-Armenia

The growing economic ties with Iran come at a political cost to
Armenia’s relations with the United States, which is increasingly
to Tehran.

Last year, outgoing US ambassador John Ordway said firmly that,
“Washington is against any investment in construction of the
pipeline taking place on the territory of Iran, or coming out of
Iran. Washington is seriously concerned about Iran’s support of
and her attempts to obtain weapons of mass destruction, and is
therefore opposed to investment in the energy sector in that

Political analyst Stepan Grigorian predicts that joint projects with
Iran will not develop further, because of the pressure from the
United States, Armenia’s biggest bilateral donor government.

“Although the US understands that at the moment Armenia does not have

any other way of ensuring its energy security, it cannot be pleased
by Yerevan’s desire to develop its ties with Iran, one of the ‘Axis
Evil’ countries. This is why the Iranian-Armenian projects have no
future,” said Grigorian.

There is a sense that Armenia’s sheer proximity to Iran leaves it
vulnerable should there be any deterioration in US-Iranian relations.

“US military action against Iran would directly threaten Armenia’s
security,” warned independent political analyst Levon
Melik-Shakhnazarian. “There is little doubt that there will be
military action, and
this means that Armenia may be the first to feel the effects.”

Armenian politicians say they are confident they can balance this
difficult relationship.

Levon Mkrtchian, head of the parliamentary group of the nationalist
pro-presidential party Dashnaktsutiun, told IWPR, “Iran is our
neighbour and partner, and the stronger our ties, the more
successfully our cooperation in all areas will develop.

“As far as relations between Iran and the US are concerned, Armenia’s

aim – as everyone knows – is to build a foreign policy which
complements the policies of other countries, and it is trying to work
all the countries in the region as far as is possible.”

Defence minister Sarkisian sounded a similar note, saying, “We very
much hope there will not be any military action, and that in the
region, this time right next door to us, there won’t be new zones of

“That is dangerous because any tension, and particularly military
action, could act as a detonator. Let’s hope that US-Iranian
improve and that existing problems are resolved peacefully.”

Karine Ter-Saakian is a correspondent with the Respublika Armenii
newspaper in Yerevan.