> Armenia and Iran have agreed to give new impetus to their
> bilateral relations and press ahead with the implementation of more
> multimillion-dollar energy projects. The agreements were announced
> in Yerevan after the July 20 meeting of their intergovernmental
> commission on economic cooperation, co-chaired by Iranian Foreign
> Minister Manuchehr Motaki and Armenian Energy Minister Armen Movsisian.
> Motaki also held separate talks with President Robert Kocharian
> and other Armenian officials. Official press releases cited them as
> praising the Armenian-Iranian relationship and stressing the need
> to utilize its untapped commercial potential. Motaki was reported to
> be satisfied with "thorough discussions" held during the commission
> meeting. He and Movsisian divulged key details of those discussion
> at a joint news conference.
> Movsisian revealed that in "one or two months" the two sides would
> start work on a third high-voltage transmission line linking the power
> grids of Armenia and Iran. The facility will enable a substantial
> increase in exports of Armenian electricity to the Islamic Republic,
> which is expected after the completion of a pipeline that will pump
> Iranian natural gas to Armenia. The pipeline's first Armenian section
> was inaugurated last March in the presence of Kocharian and Iranian
> President Mahmoud Ahmadinejad.
> Construction of its second, much longer stretch is due to be completed
> by the end of next year. That will allow Armenia to annually import
> up to 2.3 billion cubic meters of Iranian gas, or approximately twice
> the level of its current gas imports from Russia.
> It is expected that much of Iranian gas will be converted into the
> electricity that will be supplied to Iran.
> Another Armenian-Iranian energy project involves the construction of
> two big hydroelectric plants on either side of the Arax River, marking
> the border between the two countries. Movsisian announced that its
> construction would likely start early next year. It is still not clear,
> however, how the Armenian side will finance its share of the project,
> estimated at $200 million. Some analysts believe that it will borrow
> the required sum from the Iranian government. Tehran already lent
> Yerevan $34 million to construct the first pipeline section.
> Also on the agenda of the commission meeting was the Russian-backed
> ambitious idea of building a big oil refinery near Meghri, a small
> Armenian town close to the Iranian border. Kocharian reportedly
> discussed it with Russian President Vladimir Putin last January.
> Around that time an oil subsidiary of Russia's Gazprom monopoly
> confirmed reports that it is interested in the project and ready,
> in principle, to provide most of the hundreds of millions of dollars
> needed for its implementation. The project envisages that Iranian
> crude will be delivered to Meghri through a 200-kilometer pipeline
> before being turned into gasoline and other oil products that will be
> shipped to Iran by rail. Despite its vast oil reserves, the Islamic
> Republic lacks refining facilities and has to import gasoline to
> meet domestic demand. Officials have said the refinery would have
> the capacity to process about 3 million tons of oil each year.
> The governments of Armenia, Iran, and Russia recently formed an ad
> hoc working group tasked with looking into the matter. It is scheduled
> to hold its first meeting before the end of this month.
> According to Movsisian, high-level government officials from the
> three countries plan to meet in September to discuss the group's
> It also emerged that Yerevan and Tehran plan to sign a free trade
> agreement soon in order to boost the volume of their commercial
> exchange, which remains quite modest in both absolute and relative
> terms. One of the apparent reasons for that is Iran's huge import
> tariffs that effectively keep the Iranian market off limits to Armenian
> manufacturers. A statement by the Armenian government quoted Motaki
> as telling Prime Minister Serge Sarkisian that facilitating imports
> from Armenia is now a "priority" for Tehran. Motaki sounded optimistic
> about broader Armenian-Iranian trade, telling journalists that its
> volume could more than double to $500 million this year.
> These developments come just over a month after the United States
> publicly expressed concern at Armenia's growing relations with Iran
> through its then charge d'affaires in Yerevan, Anthony Godfrey.
> Speaking at a June 15 news conference, Godfrey warned that those
> ties could run counter to U.S. sanctions imposed on Tehran over
> its controversial nuclear program. He said that although Washington
> appreciates the "transparent way in which the government of Armenia
> conducts its energy relations with Iran," it expects Yerevan to be a
> "more active partner" in US-led international efforts to prevent Iran
> from developing nuclear weapons.
> Armenia has until now managed to maintain close political and economic
> ties with Iran, while being one of the world's leading per-capita
> recipients of U.S. economic aid. The U.S. warning could make it
> more difficult for Yerevan to continue to pursue what it calls a
> "complementary" foreign policy. Still, Armenian Foreign Minister
> Vartan Oskanian insisted on June 19 that his country's growing
> cooperation with its large Muslim neighbor does not breach the U.S. and
> international sanctions and will not damage U.S.-Armenian relations.
> A warm rapport with Iran is a key element of Armenia's national
> security doctrine and a rare point of consensus among its main
> political parties. They believe that the landlocked South Caucasus
> state, blockaded by neighboring Azerbaijan and Turkey, has no choice
> but to be a close partner of what is one of its few conduits to the
> outside world.
> (Azg, 21 July; Regnum, July 20; Statements by the press services of
> Armenia's president and government, July 20; Arminfo, June 19)