Yerevan counts on resumption of Armenia-Iran railway construction plan

Mamikon Babayan, exclusively for Vestnik Kavkaza
Yerevan counts on resumption of Armenia-Iran railway construction plan

The Middle East is experiencing another round of escalation after the US withdrew from the nuclear agreement concluded between Iran and the six international mediators. Washington threatens Iran with new sanctions, and between Tehran and Tel Aviv is a real confrontation in Syria that could develop into a new Middle East war. In the wider Middle East, Yerevan is trying to maintain good-neighborly relations with its southern neighbor, since Iran remains for semi-blocked Armenia the only way out to the Persian Gulf.

The Armenian side assures that it will not participate in any anti-Iranian actions, counting on a rapid resumption of the Armenia-Iran railway construction plan. Tehran also realizes the Importance of trade, economic and diplomatic ties with Armenia, as evidenced by the Iranian official media appreciation of the new Armenian government. Due to the prestige of new Prime Minister Nikol Pashinyan, Yerevan is focusing on attracting investments from the Armenian diaspora. The railway communication between Iran and Armenia is of great importance - the road will increase the transit potential of Armenia and will allow overcoming isolation. According to the plan, the total length of the track is about 330 kilometers, of which 60 kilometers will pass through the territory of Iran. The Islamic Republic is ready to build its own road section, and the rest of the track must be laid by Armenia. The cost of the project is about $ 3.2 billion.

Iran is ready to start investing in the Armenian economy. On August 19, the parties signed a Memorandum of Understanding on a joint production of agricultural machinery. Amid the sanctions pressure, Iran mobilizes all the connections available, trying to enter the Armenian market to export equipment to the member states of the Eurasian Economic Union.

Iran also seeks to implement a project of a free economic zone in Armenia to increase trade with the Eurasian Union. The implementation of the project can be hindered by the inconsistency of legislation. Nevertheless, if the free trade zone opens, it will be an unprecedented project in the entire post-Soviet space for two reasons. First, business in the FEZ can be exempted from VAT, income tax, and property tax. The second, Syunik region, where it is planned to create the zone, borders Iran, where the free economic zone Aras is already operating on the other side of the border. This opens up the wide opportunities for attracting Iranian investments in the economy. In the last two years, the trade turnover between Armenia and Iran clearly does not meet the capabilities of the two countries amounting to only $ 270 million.

Moscow does not oppose the rapprochement between Yerevan and Tehran, as Russian business is interested in the growth of the Armenian economy, which is still in a difficult situation. However, in recent years, the Western sanctions against Iran have been a deterrent to an increase in the Armenian-Iranian trade turnover, which can completely destroy the Armenian economy. First of all, this concerns the Iran-Armenia gas pipeline, as Armenia still depends on gas supplies from Iran.