Full participation in North-South International Transport Corridor  Armenia`s only chance to avoid transport blockade - Luys Foundation 

ArmInfo.Armenia's only chance to avoid transport blockade is its full participation in the  North-South International Transport Corridor, experts of the Luys Foundation believe. 

According to their research, due to objective and subjective  circumstances, Armenia was excluded from almost all international  transport corridors (ITCs) formed in the South Caucasus. "For obvious  reasons, the formed and planned East-West transport corridors bypass  our country, and the only hope of not being cut off from regional  integration processes is participation in the North-South transport  corridor. It was this realization that led to projects such as the  construction of the North-South highway, the vision of the Iran-  Armenia railway put forward by previous Armenian authorities. After  the change of power in Armenia in 2018, no significant steps were  taken to overcome the transport blockade of Armenia, as well as the  complete or partial loss of control over a number of vital highways  as a result of the 44-day war and subsequent events, which further  complicated the situation," the researcher note. 

Its authors emphasize that today the RA authorities are trying to  present the statement of the leaders of Armenia, Russia and  Azerbaijan dated November 9, 2020 as the most realistic plan to  overcome the transport isolation of Armenia, they are even talking  about the so-called "Armenian Crossroads". The Luys Foundation has  repeatedly referred to the military-political context hidden behind  the idea of unblocking communications with Azerbaijan, and the  resulting threats to Armenia. Even today, we consider the prospect of  restoring transport communications through the territory of  Azerbaijan to be unrealistic and believe that even if it is realized  as a result of disproportionate concessions on the part of Armenia,  this will be associated with a number of risks.

Therefore, even today, the only reasonable solution for Armenia to  overcome transport isolation in the region remains active  participation in the international North-South transport corridor,  redirecting at least the automobile component of the western branch  of this international megaproject to the territory of the republic.  However, to achieve this goal, it is necessary to accelerate the  process of bringing the transport infrastructure of the Republic of  Armenia in accordance with the requirements of the MTM. First of all,  we are talking about the construction of the North-South highway. As  long as the benefits of Armenia's membership in the EAEU and the  development of relations with the European Union remain, it is more  realistic to find foreign investors to implement these projects," the  study notes.

On the other hand, one should not wait with great enthusiasm and  artificial optimism for the vague process of the so-called  "unblocking of roads," but present it as an alternative to long-term  plans to update one's own infrastructure and ensure normal transport  links with Iran and Georgia. Even if these alternative routes are  opened, they will depend on the military-political interests and  calculations of Turkey and Azerbaijan, with the prospect of being  closed at any time and putting additional pressure on Armenia. If you  imagine for a moment that part of the North-South cargo  transportation will be transferred from the directions of Iran and  Georgia to the territory of Azerbaijan and Turkey through the  territory of Armenia, then you can imagine what an excellent  political instrument it will become if it ends up in the hands of the  latter, especially in the absence of a normal alternative.

The project for the construction of the North-South highway cannot be  implemented in a short time only at the expense of the state budget  of the Republic of Armenia, therefore, for its implementation it is  necessary to attract appropriate foreign investments. However, this  does not mean that state participation should be small; on the  contrary, the state should take the initiative and make a large  contribution to the implementation of the project. China can become  one of the important sources of financing for the North- South  project in Armenia.

According to forecasts by the International Monetary Fund, China  intends to invest $35 billion in the countries of the South Caucasus  and Central Asia in the coming years. Chinese companies already have  experience participating in the construction of some parts of the  project, but their participation needs to be increased. To this end,  Armenia should try to intensify its participation in the Belt and  Road project initiated by China. We are currently seeing Georgia and  Azerbaijan actively using this program, which has led to a  significant increase in Chinese investment in these countries in  recent years. The best way to rectify the situation may be the active  and high participation of Armenia in the next summit within the  framework of the Belt and Road project, scheduled for the fall," the  foundation's experts emphasize.

They also draw attention to the fact that the functioning of a free  trade zone on the North-South route will significantly reduce  transport costs of EAEU-India trade. A possible free trade agreement  with India could provide an additional boost to bilateral trade. This  means that India could also become a serious investor in the project.

One of the advantages of the North-South highway may be the fact that  currently only 2-3% of cargo is transported by rail in Iran. In other  words, until the completion of the Rasht-Astara section of the  Iranian railways, rail freight traffic constitutes only a small part  of the country's freight traffic. More than half of Iran's truck  fleet consists of obsolete vehicles 30 years old or older. This means  that with the construction of the North-South road, Armenia will not  only be able to offer Iran suitable infrastructure, but also Armenian  freight companies will be able to participate in the transportation  of Iranian goods. This could also create opportunities for logistics  organizations operating in the EAEU to invest in Armenia.

Moreover, the question remains whether, even after the construction  of the Rasht-Astara railway, rail freight transport by road will  remain out of competition. "Given the peculiarities of Iran, where,  thanks to government subsidies, the price of 1 liter of gasoline in  the domestic market is only about $0.05, and roads are in good  condition, road freight transportation will in any case continue to  grow, maintaining its competitiveness. Taking into account the above,  as well as taking into account regional and geopolitical factors, it  can be assumed that if there are normal roads on the territory of the  Republic of Armenia, Iran will be interested in carrying out part of  the cargo transportation through the territory of the Republic of  Armenia. Armenia can also count on the support of the EAEU in the  development of its infrastructure. The Republic is the only EAEU  member state that does not have direct railway connections with other  members of the union.

Considering the need to organize effective transport links between  the EAEU member states, the restoration of direct railway links with  Armenia can be considered one of the priorities of the coordinated  transport policy of the EAEU. However, it will be very important how  Armenia's relations with the EAEU member countries will develop,  first of all, what will be the course of Armenian-Russian  cooperation. In general, Armenia's transport isolation in the region  is one of the main challenges for the country's economy and security,  against which Armenia's arsenal of weapons is not very rich. In order  to avoid final isolation, it is necessary to accelerate the  construction of the North-South road, making its speedy  implementation one of the most important tasks on the national  agenda," says a study by the Luys Foundation.