Vahe Davtyan: "Baku's rapprochement with Iran knocking Armenia out of processes in region"

Over the past 20-25 years, Armenia has pursued a policy, which has been built on mere rhetoric and has not been reflected in specific projects. Armenia has had no energy or transport diplomacy, only general statements about good relations with Iran. As a result, today a situation has arisen when Iran deepens relations with neighboring countries, sending a worrisome signal to Armenia's geopolitical significance and economy. Energy security expert Vahe Davtyan said in an interview with EADaily.

- Iran's energy minister said earlier that Tehran is in talks with Armenia and Azerbaijan on the possibility of exporting electricity to Russia through the territory of the two Transcaucasian republics. What does this tell us? Because it is well known that Iran has traditionally been considered a country that buys electricity for its own needs. And how will it affect the Armenian economy?

- Iran has recently begun to change its status in the external energy policy, in particular, its policy in the field of electrical energy industry. If for 25-30 years Iran was traditionally perceived as a country with an electricity deficit despite its oil and gas reserves, then today we have a situation when the Islamic Republic solves the problem of its electric power deficit virtually step by step and holds talks to export electricity to foreign markets. It indicates a sharp change in the paradigm of the Iranian energy policy and on this basis we can conclude that Iran has completely solved the issue of the deficit and turned into a power surplus nation, which allows this country to think about increasing exports.

It is not a very good signal for Armenia. To the Iranian minister's statement on holding the talks with both Azerbaijan and Armenia, I would add another important news topic, which kind of drop off the media's radar. About a month ago, Tehran actually initiated talks with Tbilisi on the export of Armenia's electricity, intended for Iran, to Georgia. It is known that Armenia and Iran have an electricity-gas barter contract, but today Tehran practically says that it does not need this electricity and preparing to send it to Georgia. This suggests that Armenia may later face serious problems in terms of selling electricity, which is produced in the republic.

Armenia has viewed Iran as a very important importer of Armenian electricity and traditionally perceived Iran as a country with an electricity deficit, stressing that we, in turn, have power surplus. But we must admit that Armenia was somewhat late, because over the past few years we have talked about the activation of exports to Iran, but by and large, no real steps were taken in this direction. And the only thing Armenia has is the barter contract, which, as we see, is of purely symbolic meaning for Iran. Therefore, Iran's statement on export indicates rather serious risks for the Armenian energy sector, which should be built on the principle of boosting exports.

- But do foreign markets want Armenia to intensify?

- Foreign markets are increasingly closing for Armenia today, it happens because of two important factors. First, the high cost of electricity produced in Armenia. Second, the build-up of energy capacities by our neighbors: Georgia solved its electricity deficit problem, Iran, as we see, also did it. The Armenian energy system, while not being export-oriented and having low domestic consumption indicators, is surplus, this leads to a rather pessimistic assumption that we should not hope for low tariffs inside the republic in the near future. 

- The Convention on the Legal Status of the Caspian Sea was signed on August 12, and many call it Azerbaijan's another victory in the policy of isolating Armenia in the region. Is it possible to consider this event in such a negative light?

- I do not want to dramatize this issue too much, since I do not think that the signed Convention is aimed at deepening Armenia's isolation. Of course, the Caspian Convention indirectly affects Armenia's regional interests. In particular, as for the energy component, I do not see here a direct link with Armenia's interests, which may suffer. But if we consider the issue in geopolitical or military-political terms, then Armenia is not in a very favorable position.

It is explained by the fact that in addition to the economic component of the Convention, it is still a document forming a certain system of mechanisms for effective interaction between Russia, Azerbaijan, Iran and two other Caspian countries. Accordingly, based on economic cooperation, which unites the participants of this document, one or another geopolitical issues can be  periodically raised.

Here we are witnessing the rapprochement between Russia and Azerbaijan, as well as the rapprochement between Azerbaijan and Iran, which traditionally had serious disagreements over the Caspian Sea. But since the mechanisms have been created to settle all issues between the Caspian states, Armenia's geopolitical role is taking a back seat.

- Against the backdrop of all these factors - the deepening of the Azerbaijani-Iranian and Russian-Azerbaijani relations, the signing of the Caspian Convention and Iran's decisions on its electricity market, what is your forecast of future relations between Yerevan and Tehran?

- Iran is a very pragmatic geopolitical player which will always keep its balance: its economic relations with Armenia will continue against the backdrop of deepening economic cooperation with Azerbaijan. It's another matter when we try to compare the relative weight of the Armenian-Iranian and Azerbaijani-Iranian economic cooperation. The preponderance is clearly not in favor of Armenia here. And it is not just a matter of energy communications, which are gaining an increasing volume in the Iran-Azerbaijan relations, but also of the transport and logistics component. A number of projects that were originally supposed to be implemented on the territory of Armenia, were refocused on Azerbaijan. Armenia's main problem was that Azerbaijan could offer Iran more favorable conditions.

I believe that the Armenian-Iranian cooperation will preserve the current volumes (Iran occupies the fourth place in Armenia's foreign trade with the trade turnover of $250-300 million), but the increase will be in the direction of Azerbaijan. Especially taking into account that the signing of the Caspian Convention gave free rein to Baku and Tehran, new energy projects will be formed, which were simply frozen because the parties did not have a common vision for using the Caspian water and subsoil resources.

The situation even reached a point where Azerbaijan regards Russia as a supplier of gas through the Southern Gas Corridor, which is fundamentally contrary to the European Union's energy diversification.

- Why is that the case?

- Time is not on Armenia's side, we are far too late. Over the past 20-25 years, Armenia has pursued a policy, which has been built on mere rhetoric and has not been reflected in specific projects. Armenia has had no energy or transport diplomacy with Iran. Now, geopolitical architecture is developing in such a way that Armenia is losing the weight and importance, which it partially had about 20 years ago and which could be raised in the case of competent foreign policy in the future. Unfortunately, the Armenian foreign policy has no conceptual basis today. Hence the drop-out from regional processes.