Armenia, Iran Strengthen Ties

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 the agreements which have been reached are implemented as soon as possible.”

Only a few years ago, Iran was Armenia’s most important trading partner. The relationship between the Islamic republic and the Christian 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 Armenia.

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 year, 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 of 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 two 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 it.”

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 see 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 he thought the Russian firm should participate in the Iran-Armenia project.

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

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

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 of 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 closest 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 with 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 tension.

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

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