By Erik Davtyan
On July 14, after a long period of tense and complicated negotiations, the “P5+1” group—the United States, Russia, France, China, the United Kingdom and Germany—reached a historical deal with Iran over the Islamic Republic’s nuclear program. The nuclear deal will have both global and regional consequences, especially for Iran’s neighboring states. In this context, the agreement is of crucial importance for Iran’s landlocked northern neighbor Armenia. For the past 20 years, Armenia has lived under a dual blockade imposed by Turkey and Azerbaijan. Thus, the country’s cooperation with Iran serves crucially as one of Armenia’s two remaining possible routes (the other being across Georgia) to access the global market. Consequently, the long-term hostility in Iran’s relations with the West and rigorous international restrictions on Iran had provoked a deep anxiety in Armenia.
Armenia announce its official position on the Iranian de-nuclearization accord immediately after the deal was reached. On July 14, the minister of foreign affairs of Armenia, Edward Nalbandian, stated: “Armenia welcomes the agreement reached over the Iranian nuclear program as a result of constructive and goal-oriented efforts by Iran and the international mediators. This long-expected agreement is an important achievement in favor of strengthening international, regional stability and cooperation. We [Armenia] hope that it will be an additional impetus to the enhancement of trade and economic cooperation between Armenia and friendly Iran, the realization of joint projects” (Mfa.am, July 14).
The possible implications of the Iran deal for Armenia will have political, economic and geopolitical consequences. From a political point of view, Armenia will no longer be bound by the United States’ and the European Union’s sanctions as obstacles to wider and deeper political dialogue with Iranian authorities. Previously, the US aimed at isolating Iran from almost all of its neighbors. But after the détente in US-Iranian relations, new conditions may now be able to emerge for further political dialogue between the governments of Yerevan and Tehran.
The economic aspect of the deal is perhaps the most important dividend for Armenia. As Foreign Minister Nalbandian mentioned in his statement, the nuclear deal has opened new perspectives for bolstering bilateral economic relations and joint projects. According to the Custom Service of Armenia, in 2014 Armenia-Georgia trade turnover reached nearly $150 million, whereas the trade with Iran reached $290 million (Customs.am, accessed July 23). Nevertheless, the majority of Armenian exports presently reach global markets via Georgian transit. For now, overland travel between Armenia and Iran is limited to one bridge across the Arax River. But once on the Armenian side of the border, this road then becomes the country’s major “North-South” highway, which is currently under renewed construction for the purpose of “expanding and facilitating [Armenia’s] access to foreign markets toward Central Asia and Europe” (Northsouth.am, accessed July 23).
Both the Armenian government and the domestic expert community believes that the new situation brought about by the Iran deal will have a positive impact on economic cooperation between Armenia and the Islamic Republic. While delivering a speech at the joint summit of the BRICS (Brazil, Russia, India, China and South Africa), the Eurasian Economic Union (EEU) and the Shanghai Cooperation Organization (SCO), in Ufa last month, President Sargsyan expressed hope that “success would crown negotiations on the Iranian nuclear file, which in turn will strengthen both international and regional security and stability, as well as open up new opportunities for economic cooperation” (President.am, July 9).
The discussion over the future construction of the Armenia-Iran railway is a top issue in the two countries’ bilateral economic agenda. At the July Ufa summit and during his earlier state visit to China (March 24–28), President Sargsyan stressed the importance of the railway and invited all interested parties to contribute to this project. The nuclear deal, if it is successfully implemented, is expected to open Iran up to significant flows of foreign direct investment, thus increasing the possible interest of foreign companies in the railway project. This fact attracted even the Chinese official news agency, “Xinhua” (Russian.news.cn, July 15).
Along with the railway program, the two states will now have the opportunity to initiate cooperation in other spheres of mutual interest, especially in agriculture and cattle breeding. Expert Sevak Sarukhanyan mentions that some investment in Armenian farm industry are focused on export to Iran, however the heretofore instability of the Iranian currency (which was directly connected with sanctions) until now halted all goods exchanges in this sphere (Media-center.am, July 17).
The geopolitical consequences will have long-term effect on Armenia’s foreign and economic policy. Armenia is the only member of the EEU that neighbors Iran and the wider Middle East. Therefore, if economic cooperation between the Eurasian Union and Iran grows in the coming years, Armenia will inevitably gain transit status, connecting the transport routes of the EEU members with those of Iran. Armenian ambassador to Iran, Artashes Tumanyan, states that Iran will have the opportunity to enter the 200-milion-person market of the EEU, and considers Armenia “a gate to the EEU” for Iranian exporters (Armenia.irib.ir, July 15). Moreover, at the Ufa summit, President Sargsyan declared that “interaction at the junction of the BRICS-EEU-SCO lies in our [Armenian] interests in ensuring complementarity and mutually beneficial development of those integration processes” and that “construction of the railroad connecting Armenia to Iran might be such a project that would provide the EEU nations with direct access to the Indian Ocean through the Persian Gulf” (President.am, July 9).
The obstacle to Armenia’s ability to take on a large-scale transit role is the lack of a common border with the EEU. Goods from Armenia to the rest of the EEU—and vice-versa—are, therefore, mainly limited to passing overland through Georgia. But although Georgia is pursuing European integration, Georgian officials have always underlined that the difference in Georgian versus Armenian integration models will not affect bilateral relations and that this “might set a good example for the international community” (Gov.am, August 21, 2014).
In order to make the road connection with Armenia stronger, Russia plans to repair the Avar-Kakheti road that passes from Dagestan southward to the border with Georgia (Georgianjournal.ge, October 23, 2014). Despite warnings from experts about the negative implications of the Russian Avar-Kakheti road to Georgia’s security (Gcssi.org, July 31; see EDM, October 2, 2014; December 15, 2014), the Georgian government does not seem opposed: The secretary of the Security Council of Georgia, Irine Imerlishvili, said late last year that “the Avar-Kakheti road,” which would be linked up with the strategically important east-west Georgian Military Road, “does not threaten the security of Georgia” (Vestikavkaza.ru, December 14, 2014). So, in case of successful reconstruction of the road, Armenia and Iran would have easier access to the EEU.