Armenia and post-sanctions Iran. Opportunities and constraints

The beginning of 2016 will be probably remembered for the lifting of international sanctions on Iran. This event has changed long-consolidated equilibria not only in the Middle East but also in the South Caucasian region. While oil-rich Azerbaijan has good reasons to fear the return of Teheran on the global energy market, apparently Armenia has only to gain from that. Even if the two bordering (and internationally isolated) countries have always somehow interacted, Yerevan knew that too much enthusiasm in this regard would have not only enraged the Russians, but also severely compromised its relations with the western word.  Departing from that, the recent international rehabilitation of Iran provides an interesting opportunity to Armenia, allowing it to have a normal relationship with another bordering country (in addition to Georgia). Currently, talks between the two countries are ongoing. Among other things, the possibility of Iranian gas transit through Armenia is being discussed. In spite of all these potential gains, the Armenian presidential office is remarkably silent on the issue. Remarkably President Sarkisian, who at the beginning of March found the time to congratulate the “Young land defender members”, did not make any public declarations about future forms of cooperation with Iran. Similarly the Ministry of Foreign Affairs, which has actively worked to make talks happen, has not advertised these efforts loudly. This low profile can be put down to the fear of enraging Russia. However, even if this factor is absolutely crucial, it would be incorrect to explain the whole dynamic in light of the interaction with the Kremlin. Conversely, a deeper understanding can be gained first by looking at the relation of Yerevan with the West and second by looking at the domestic dimension.

Further cooperation with Iran would undoubtedly benefit Armenia. First, it would be a golden opportunity for Yerevan to break its “dual dependency” on Russia, as energy provider, and on Georgia, as a main transit route.  As result of the Nagorno Karabakh conflict, Armenia’s borders with Turkey and Azerbaijan have been closed. This has led to a pattern of asymmetric relations with Russia. Second, better relations with Iran would indirectly advantage Armenia vis-à-vis Azerbaijan, which in turn has been experiencing some lingering tensions with the Shi’ite giant.  More specifically, even if both Baku and Teheran are Shi’ite energy-rich countries, cooperation is hampered not only by different ideas about the role of religion in public, life but also by the presence of a large Azeri minority (around 20 million people) in Iran. In spite of that, they have found some understanding, as exemplified by their decision to complete a railway link by the end of 2016. However, this project does not mean that Mr Rohani has ruled out the Armenian option. Remarkably, in February Armenian public TV announced that Iranian specialists would soon visit the country and assess the feasibility of a railway connection. In brief Armenia, over-dependent on Russia and structurally isolated from the rest of the region, seems on the paper a less-attractive partner than Azerbaijan. However, the tensions between Teheran and Baku may work in favour of Yerevan by promoting its inclusion in Iran’s long-term plans.

Despite all the aforementioned benefits, Iranian-Armenian cooperation is not obstacle-free. First, the Armenian potential for international actions is severely restricted by its pervasive ties with Russia. Looking specifically at energy and economic factors, two elements emerge: the role of Gazprom and the membership in the Eurasian Union. First, the Russian state-owned Gazprom gas company is in control of the whole Armenian gas market. More precisely in 2014 Gazprom, which was already the majority stakeholder in the Armenian gas company, bought the remaining shares and become its sole owner[1]. Additionally, in January 2015 Armenia joined the Russian-led Eurasian Union. Due to its membership, Yerevan is barred from setting its own custom duties and, consequently, restraints are placed on its free-trade policy. All these elements are indicative not only of the Kremlin’s influence over Armenian external relations but also its interest in keeping the “smaller brother” firmly in its orbit.

As already hinted, understanding the Russian factor is necessary but not sufficient to explain the Armenian-Iranian relationship. Remarkably, the willingness to keep good ties with the United States and the European Union is another important factor in the equation. When sanctions were in place there was a tacit understanding that the West, first and foremost the US, would not have tolerated blatant violations of the international embargo. Henceforth, interactions with Teheran had to been qualitatively discreet and quantitatively limited. Even if the lifting of the sanction regimes changes this state of things, the situation is still too fluid to allow excessive public expressions of enthusiasm. The same applies to Brussels. In a recent interview the EU representative for external affairs, Federica Mogherini, when asked if Yerevan could act as the “new Hong-Kong” and connect the EU to Iran, answered that Brussels, fully aware of the potential benefits, is closely observing the situation[2]. In a nutshell, given the “in-progress” nature of this geo-political shift, Armenia seems to consider it prudent to interact discretely with Teheran rather than to voice premature enthusiasm.

The final constraint to the enhancement of the Iranian vector has domestic rather than international origins. From a series of expert interviews in summer 2015, some concerns about making deals with Iran[3] emerged. Generally speaking, the Iranians were described as difficult partners to come to terms with. This view is not restricted only to the indigenous cultural elite, but is also shared by the population at large. Remarkably, from a Caucasus Barometer survey it emerges that only 52% of Armenians approve of doing business with Iranians[4]. This approval rating is significantly lower than the case of doing business with Russians, Americans, Europeans and Georgians. This analysis of grassroots perceptions suggests that deals with Iran, even if objectively convenient, may encounter a lukewarm domestic reaction. That might explain why Armenian political actors, first and foremost the president, are not eager to advertise the recent developments with Iran too much. In sum, while international considerations are important for understanding Armenia’s cautious approach to Iran, domestic implications should be further investigated.

This research was supported by a FP7/Marie Curie ITN action. Grant agreement N°: 316825

Notes

[1] Even before, the contractual strength of Russia over Armenia successfully prevented any real energy diversification.

[2] BBC Monitoring Trans Caucasus Unit (2016), “EU foreign policy chief interviewed on relations with Armenia”, February 29 (Retried through LexisNexis).

[3] All conducted by the author in Yerevan, in English, as part of the fieldwork related to her PHD thesis.

[4]  46% disapprove and 2% do not know.

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