Armenian-Russian relations face uncertain times

Feb 24 2005

Samvel Martirosyan 2/24/05

Despite Moscow’s strong interest in Armenia’s energy sector,
officials in Yerevan worry that the Kremlin is considering a policy
realignment that would enhance Azerbaijan’s stature at the expense of
the Russian-Armenian special strategic relationship.

The main source of Yerevan’s concern is a planned railway project
that would connect Iran to Russia via Azerbaijan. Armenian officials
fear that the railway, if built according to current plans, would
deepen Armenia’s regional economic isolation. The proposed Kazvin
(Iran) – Astara (Azerbaijan) line would skirt Armenian territory,
denying Armenia an opportunity to expand trade with Russia. Given the
existing economic blockade maintained by Turkey and Azerbaijan,
Armenia can ill afford to be left on the sidelines of such a project,
officials in Yerevan say. [For background see the Eurasia Insight

Since the 1991 Soviet collapse, Armenia has maintained a close
strategic relationship with Russia, in part to offset the
geopolitical disadvantage of having hostile neighbors on its eastern
and western flanks. In recent years, the special relationship has
shown signs of fraying. Russia-Azerbaijani relations have thawed,
while Yerevan has expanded contacts with both Iran and the United
States. [For additional information see the Eurasia Insight archive].

Armenian officials took note of Russian Foreign Minister Sergei
Lavrov’s February 2 trip to Azerbaijan. Lavrov’s comment in Baku that
“there are no unresolved problems” between the Russian and
Azerbaijani governments heightened concerned in Yerevan about
Moscow’s potentially shifting loyalties in the South Caucasus.

Lavrov’s February 16-17 visit to Armenia did little to assuage
Yerevan’s concerns. During talks with Lavrov, Armenian Prime Minister
Andranik Markarian voiced concern about the railway project,
according to official sources. In response, Lavrov merely indicated
he would relay the Armenian government’s views to Russian Transport
Minister Igor Levitin and Russian Railways President Gennady Fadeyev.

Markarian and Lavrov also reportedly discussed the possibility of
reopening the Abkhaz section of Georgia’s railway system, a link that
would reestablish Armenia’s railway ties with Russia. Officials
provided no details on the substance of those discussions.

Problems between Yerevan and Moscow are not limited to rail-related
topics. For the past two years, five Armenian companies, handed over
to Russia as compensation for $100 million in unpaid Armenian debt to
Moscow, have stood idle. In his meeting with Markarian, Lavrov
assured the prime minister that Russia is doing everything possible
to reopen the companies, but neither Moscow nor Yerevan has announced
a concrete plan for getting the firms up and running again. Golos
Armenii (Voice of Armenia), a Yerevan-based Russian-language
newspaper, has described the fate of these companies as the most
sensitive issue in relations between Russia and Armenia.

Armenian media outlets also looked askance at Lavrov’s actions on his
recent visit to Azerbaijan, when the foreign minister visited Baku’s
Martyr’s Avenue, a memorial to the 130 people killed during the
Soviet Army’s 1990 crackdown on anti-Armenian pogroms in the
Azerbaijani capital. Meanwhile, as Armenia commemorates 2005 as a
Year of Russia, Russia has declared 2005 a Year of Azerbaijan.

Moscow’s recent behavior has left some Armenian political leaders
feeling confused. “Honestly speaking, Armenia sometimes does not
understand some of Russia’s steps, especially those concerning
relations with Azerbaijan and Turkey,” Giro Manoyan, international
secretary of the Armenian Revolutionary Federation, a member of
Armenia’s ruling coalition, said in a recent interview with the
Caucasus Journalists Network.

Amid the uncertainty surrounding the Armenian-Russian special
relationship, Armenia’s energy sector is one strategic area in which
Russia, sensitive to growing Western influence in the South Caucasus,
maintains a strong interest. Accordingly, Lavrov probed economic
cooperation possibilities with Markarian.

The Russian energy company United Energy Systems (UES) is reportedly
considering the purchase of Armenia’s electricity distribution
network, according to the Armenian news agency ARKA. UES already
holds three power stations in Armenia – Sevan-Hrazdan hydropower
plant, the Hrazdan thermal power station and the Armenian Nuclear
Electric Plant – facilities that generate some 75-80 percent of the
country’s electricity. With the purchase of UK holding company
Midland Resources’ 80 percent stake in the distribution network, UES
would hold control over almost the entire Armenian electrical power

Russian energy giant GazProm, has been similarly active. The
Iranian-Armenian gas pipeline, scheduled to be operational before
2007, could provide stiff competition for gas in European markets
from GazProm’s own Blue Stream gas pipeline project with Turkey,
according to GazProm Deputy Chief Executive Officer Alexander
Ryazanov. “If we do not take part in the construction of [the] Iran –
Armenia gas pipeline, no one knows where that gas will go,” the news
site PanArmenian Network reported Ryazanov as saying at a recent
session of the Federation Council, the Russian parliament’s upper

During his trip to Armenia, Lavrov confirmed Russia’s interest in
joining a pipeline construction consortium. “We received an offer,
inviting our corresponding structures to take part in this project,”
Lavrov said, repeating past assurances that the pipeline meets with
Russia’s approval. “This offer is presently under consideration and I
am convinced we will be able to give an answer in the nearest

Editor’s Note: Samvel Martirosyan is a Yerevan-based journalist and
political analyst.