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 Tuesday, January 26 2016

Степанян Դավիթ Stepanyan Ստեփանյան David Давид

Sevak Sarukhanyan: Lifting of US and EU "nuclear" sanctions from Iran will not lead to a turning point in relations with Armenia

Sevak Sarukhanyan: Lifting of US and EU "nuclear" sanctions from Iran will not lead to a turning point in relations with Armenia

 The Jan 16 lifting of the US and EU “nuclear” sanctions imposed on Iran in 2005 has reduced the oil prices even more. How will this step of the West influence the prospects of Iran’s economic development?   

 

The removal of part of the western sanctions from Tehran will really contribute to stabilization of the macroeconomic situation in Iran. Nevertheless, the question whether Iran will be able to reasonably take advantage of the current situation is still hanging in the air. Today Iran can export oil and make big international deals.  Nevertheless, Iran will need half a year to boost the Iranian oil export to 0.5 mln barrels daily, even amid maintenance of low oil prices, especially as in that case the export of cheap oil will not stop the recession in the Iranian economy. So, the removal of the western sanctions is not enough to overcome the recession and develop the Iranian economy. Serious structural reforms are needed to liberalize the Iranian economy. In particular, the matter concerns facilitation of foreign investors' access to the country. Certainly, President Rouhani can initiate such reforms. However, such decisions should be approved by the Iranian Parliament, which is mostly represented by religious and conservative forces. Therefore, the reforms will come across active resistance because they will affect the interests of the old elite, which holds quite an important place in the Iranian economic life. One should not expect any tangible economic progress in Iran given that the number of Rouhani's supporters in the Parliament will not considerably change.

 

Armenian experts are seriously discussing Yerevan's possible steps towards the country's involvement in new Armenian- Iranian infrastructure projects. They think that the removal of the sanctions creates favorable conditions for promotion of the cooperation. What do you think of this?  

 

I think the lifting of the US and EU "nuclear" sanctions against Iran will not lead to a special turning point in the relations with Armenia. Therefore, I am not inclined to share the euphoria in certain circles of Armenia. The problem is that the largest Armenian-Iranian projects of the last 20 years - for instance, the construction of the Iran-Armenia gas pipeline - have already been implemented. Certainly, there are some incomplete projects, but Iran has nothing to do with the funding. The matter particularly concerns the construction of the North-South highway. The third Iran-Armenia electric power transmission line is also being laid at the expense of the funds raised by Yerevan. As regards the popular project of construction of the Meghri hydropower plant, which was to be funded by Tehran, the obstacles have finally disappeared. However, measures should be taken to trigger Iran's interest in the project again, because the project has been frozen for a long time and the Iranian policy in the South Caucasus has undergone certain changes.

 

After Gazprom's talks with Energy Minister of Georgia Kakha Kaladze in Luxembourg, Alexey Miller said that at the moment Gazprom "jointly with Iranian colleagues is working over the issue of exchange operations." Does it mean that Armenia may become a transit country for gas supplies? 

The negotiations for import of the Iranian gas by Georgia are about purchase of "virtual" gas only. The most probable scheme is that after Tbilisi and Tehran sign a gas import deal, Georgia will be supplying that 'Iranian gas' from part of the Russian gas transported to Armenia via its territory. In exchange for that Iran will pumping as much gas into the Iran-Armenia gas pipeline. And that very gas will be sold in Armenia as the Russian gas, which is legal. It is a SWAP system widely applied in the world, including in the region. As for the goals and return on investment study of that virtual scheme, the problem is the price formation. Five years ago, the Russian gas was more expensive than the Azerbaijani one. Now, the situation is just the opposite.

 

During the latest talks of Prime Minister of Armenia Hovik Abrahamyan and Transport Minister of Russia Maxim Sokolov in Yerevan,  the Russian side expressed readiness to weigh its participation in the Iran-Armenia railway project that was due to be shelved. The issue is being discussed with China and Iran. The project will not hold Beijing from implementing its "Silk Road" projects and Tehran from involving into the Qazvin-Rasht-Astara railway project. Would you describe the prospects of the Iran-Armenia railway? 

 

The Iran-Armenia railway is a very expensive project that can be implemented only if potential investors show an economic interest in it. There is no such interest yet. This will happen only in case of drastic political and military-political transformations, for instance, if there is a situation when the use of Azerbaijani railways becomes risky or impossible. This may happen also if the Abkhazian section of the Georgian-Russia railway is reactivated.  There are some other options too. But no one will take an interest in the project unless there are changes in the geopolitical situation in the region.  I think Beijing may decide to invest in the project for some other, non-economic reasons too. At the same time, one should understand that several billions of dollars are needed. No one will invest such a big amount without anticipating a return.

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