Is the Iran – Armenia railway project an illusion?

Photo Credit: ArmeniaNow.com
Photo Credit: ArmeniaNow.com

The construction of a railroad connecting Armenia with Iran was first promised by Armenian President Serzh Sargsyan in an address to the National Assembly (parliament) in October 2008. Financing the construction, however, was a problematic issue: while Iranian officials confirmed the commitment to build a link connecting Iran’s existing railroad network to the Armenian border, a considerably larger investment would be required to carry out the construction on the Armenian side. The estimated cost of building the Armenian section of the railroad is about $3.2 billion, which does not include the costs of land acquisition and customs duties on equipment. The project’s entire cost is on a level comparable to Armenia’s annual budget.  Clearly, the lack of financial resources, as well as, necessary political willpower, also can be seen as a reason behind the non-implementation of the project.

The situation was about to change in 2015, when China repeatedly expressed its interest in the financing of the construction of Iran – Armenia railway. Currently, Yerevan seeks for a deeper economic cooperation with China in various fields. Therefore, Armenia actively discusses the possibility of Chinese sponsorship of the Iran – Armenia railway project. However, nearly all official statements of Chinese and Armenian officials regarding the future of the project remained on the paper.

On the other hand, Armenia’s main regional partner – Iran seems to be reluctant in giving a loan for the construction of the Armenian part of the railway – which is approximately 250 km. The Iranian part of the railway is just 60 km. According to local mass media, the total amount of the project estimated at 3.2 billion U.S dollars. Thus, the implementation of the Armenia – Iran railway that is supposed to connect Asia with Central Asia is just an economic matter for official Yerevan.

The already mentioned railway project was one of the most effective tools of president Serzh Sargsyan during presidential elections in 2008. Most probably, at the beginning, Armenia sought to get an economic support from Iran for the construction of the railway, but then, Iran’s economy neglected under the sanctions was not able to support the project. Today sanctions on Iran were lifted up, but seemingly, now Iran is more interested in its own transportation projects, such as Qazvin – Rasht – Astara (Azerbaijan). This railway is a part of the North-South corridor that will link other railways of Russia, Iran, and Azerbaijan. Moreover, In June of 2016, Iran received subsidy around 500 million U.S dollars from the International Bank of Azerbaijan for the final phase of the aforementioned railway.

Undoubtedly, Iran – Armenia railway would be very useful for the latter, but Iran is not interested in it as much as Armenia does. Reportedly, Iranian officials now work mostly on the new transit corridor project Iran – Georgia – Armenia – Bulgaria – Greece. Iran is striving to serve as a trade hub not just for the Middle East, but into Europe and Central Asia. The new transit corridor will allow Iranian goods to be carry to the Southern Europe. Now the sides are considering the technical aspects of this project and in Sofia. They will try to solve the political problems it implies. It is Iran’s wish to bypass Turkey. And Armenia is the best alternative here as, according to Iranian President Hassan Rouhani.

Another reason that makes the İran – Armenia project impossible is that Armenia is supposed to construct the railway from Meghri to mountainous Yeraskh (near Azerbaijani enclave Nakhchivan), while Iran just needs to modernize the old railway to Meghri. Although, Armenia actively discuss the railway project, but completely unable to offer any alternative project or idea that Tehran might be interested in. Meantime, neighbourhood Azerbaijan rapidly takes an initiative in the railway race. As it was said by Akop Badalyan, Baku does not Armenia’s “stake” away, just Armenia did not figure out where its “stake” is.

Apparently, Russia – the main protector of Armenia has shown less enthusiasm in the Iran – Armenia railway project, as the Kremlin is quite doubtful about the real aims of the project. In addition, it needs to be noted that Armenia’s state railway company is largely owned by the Russian “Southern-Caucasus Railway” company. It means Yerevan literally is not able to promote the implementation of Armenia – Iran railway without Russia’s blessing. The company controls the main transit and transportation projects of Armenia and is the only responsible body for official negotiations with foreign investors, and countries concerning the transportation projects.

To sum up, Armenia’s endeavour to find reliable investors for the Iran – Armenia railway project failed in 2017, as referring to News.am the government of Armenia has made a decision to close department of the Iran – Armenia railway under the Ministry of Transport. Considering all these facts, it is safe to note that the railway project between Iran – Armenia is doomed to failure.