ARMENIA’S NEW YEAR RESOLUTION: CLOSER TIES WITH IRAN
Haroutiun Khachatrian
EurasiaNet
Jan 15 2009
NY
Plans for ambitious joint infrastructure projects between Armenia and
Iran may prove a key first test of President-Elect Barack Obama’s
policy intentions toward Tehran and Armenia’s own economic muscle
amidst the global economic crisis. Analysts note that international
reactions to the projects could prove a bane or blessing.
On the drawing board are a railroad between Iran and Armenia, an oil
pipeline from Iran’s Tabriz refinery to a special terminal to be built
in Armenia’s Ararat province, and a hydropower station on the Araks
river, which borders the two countries. Bringing Armenian-Iranian
trade relations into sync with World Trade Organization requirements
is also under consideration, Energy and Natural Resources Minister
Armen Movsisian Gevorgian, who co-chairs the Armenian-Iranian
intergovernmental commission, told reporters on December 26.
The Armenian government expects work on the railroad to begin by
late 2009, Prime Minister Tigran Sargsyan told a group of reporters
in late December.
With its Turkish and Azerbaijani borders closed, the projects present
a critical chance for Armenia to create alternative routes for
supplies and shipping. Its only open land border — with Georgia —
is considered highly insecure following Georgia’s war with Russia
last August.
Potential financial and political difficulties, however, mean that
opinions vary about the projects’ feasibility.
For now, Armenia appears to be betting that President-Elect Barack
Obama’s administration will not attempt to obstruct the projects,
commented one Middle East expert in Yerevan. In her January 13
confirmation hearings, Sen. Hillary Clinton (Democrat-New York),
Obama’s proposed Secretary of State, told senators that the
administration is looking at "a range of possibilities" for a new
approach to relations with Tehran.
"A change in U.S. policy towards Iran was an expected event, and even
the outgoing administration of George W. Bush was reported last spring
to undertake some rapprochement with Iran . . . ," commented David
Hovhannisian, a professor at Yerevan State University and a former
Armenian ambassador to Syria.
"The need for such changes is dictated by the fact that Iran is an
important regional player, and many problems — such as the problems
of Iraq, the Middle East, and even the complicated relations of
the U.S with Turkey — make a dialogue between Washington and Iran
important," said Hovhannisian, who also is a member of the unofficial
Turkish-Armenian Reconciliation Commission.
Analyst Sergei Shakariants, an expert on geopolitical issues with
the Institute of Political Problems, a Yerevan-based think tank,
expresses greater skepticism. In the end, he projected, the new
U.S. administration may simply opt to continue President George
W. Bush’s policy of isolating Iran.
The Armenian foreign ministry, meanwhile, is keeping its cards to
its chest. "Armenia has always been for solving all problems through
negotiation and for this reason it positively assesses dialogue
between Iran and the U.S," commented spokesperson Tigran Balaian.
Shakariants believes, however, that Iran’s interest in the projects,
and that of Russia and China, will override such concerns. Iran
already runs a gas pipeline from Tabriz to Armenia that can handle
2.5 billion cubic meters of gas annually.
"Iran is very interested in the railroad connecting it with Armenia,
and further with the Black Sea region, as this will give Tehran
an advantage against its competitor in the region, Turkey," he
commented. "These ambitions are supported by Russia, and most likely,
by China."
China was invited to take part in construction of the Iran-Armenia
railroad during a December 15-19, 2008, visit by an Armenian
parliamentary delegation to China. Beijing is reportedly considering
the proposal, according to parliament.
Finding such investors is critical to the projects, noted Noyan Tapan
news agency analyst David Petrosyan. The railroad, with a total
price tag of between $1.5 and $2 billion, would cut shortly into
Armenia’s budget amidst the global economic downturn. The entire
2009 budget is $2.38 billion, and the government faces difficulty
collecting even these revenues under the current economic crisis,
the analyst believed. The pipeline from Tabriz is estimated to run
another $200-$240 million, squeezing the budget still further.
Under the terms of the agreement, Iran and Armenia would split the
projects’ overall cost.
In a December 29 interview with local reporters, Prime Minister
Tigran Sargsyan stated that the Asian Development Bank has provided
a $1 million grant to perform feasibility studies for the railroad
project. Private investors, he claimed, have also expressed interest in
it. "The government is ready to allocate its money for this railroad,
and the participation of other governments and private investors is
also possible," Sargsyan said. He did not elaborate.
At the same time, the government is keeping a sharp eye on the
Parliamentary Assembly of the Council of Europe’s January 29 vote on
whether or not Armenia has met two resolutions related to the March
2008 crackdown on opposition protestors. A decision that Armenia has
not met the requirements, which could cost Armenia its PACE voting
powers, may impact Yerevan’s ability to attract outside investors to
the Iranian projects, said analyst Petrosyan.
While many investors may find the PACE vote no serious obstacle,
such concerns now run common. In late December, National Assembly
Chairperson Hovik Abrahamian appealed to the parliamentary heads of
other Council of Europe member states about the vote, saying that a
vote against Armenia "will be an additional and serious pressure on
the country’s economy by decreasing [the] trust of foreign investors."