Iran & Armenia - hopeless friendship

Rising tension over Iran, new sanctions and oil embargo do not keep Yerevan from close cooperation with Tehran. It seemed that Armenia receiving from the U.S. dozens of millions of dollars as financial assistance should have joined the Western embargo. However though Armenia has always stressed high level of relations with the West Yerevan has no other way out and cannot afford to stop supporting Iran.

Because of the territorial claims to all around it Armenia has close borders with 2 of its 4 neighbors - Azerbaijan and Turkey. If there is a threat of closure of borders with Iran as well (knowing tough nature of Iranian leaders, there is no doubt they will do that in case Yerevan stops fully supporting Tehran), Armenia will sign death penalty for itself. Poor Armenia which doesn't have own reserves of hydrocarbons, will not be able to survive under blockade conditions from the neighbors and the single access to the external world through Georgia.

However today when Western countries do their best to stop Iranian nuclear program, close cooperation of Armenia and Iran is impossible not to damage international image of Yerevan. The West understands that establishing more and more closer relations with Armenia Iran pursues not so much economical as geopolitical goals, planning in case of danger secure its rear as represented by Armenia. But does the West need such Iranian 'rear' in the South Caucasus and won't the U.S and the EU stop financial assistance to Yerevan in case such situation emerges? Even if the West turns a blind eye to hopeless friendship between Yerevan and Iran, issue of suitability of relations' development remains open.

Iran which ranks fourth in terms of oil reserves and second in the list of leading natural gas producers suffers from consequences of Western sanctions much more than officially recognizes it.

Iranian Deputy Oil Minister Ahmad Qalebani took quite surprise step revealing information on impact of sanctions in his article published by the Iranian Student's News Agency (ISNA). According to the agency, the deputy minister said production of crude oil in Iran in 2011 decreased compared to 2010. He said the decrease was caused by lack of investment in development of oil fields.

In 2010 Iran produced on average about 4 million barrels of oil per day and 3.5 million barrels in 2011.

The EU sanctions envisaging ban on purchase of oil, freezing of the European assets of the Iranian Central Bank, as well as export of equipment and technologies for the Iranian petrochemical industry threatens Iran with serious economic problems.

Amidst this fate of Armenia which pins its hopes on joint with Iran projects is seen very regrettable. There were a lot of cooperation plans. For example, first of all a question arises about projects of construction of the third power transmission lines from Iran to Armenia with a capacity of 800-900 MW worth $110 million, construction of the largest in the South Caucasus hydro power plant at Aras river worth $500 million.

Construction which should begin in 2012 will be financed by Iranian companies. However, taking into consideration inflation rate and fall of the Iranian rial the question arises whether these projects will be completed. Iranian rial fell by 10 per cent during the trade session on Jan.23 after it became known that the EU introduced economical sanctions against the Iranian Republic.

At present one $1 in Iran amounts to about 20,500 rials. During the last week rise of US dollar towards rial was 15 per cent and during the month - over 50 per cent. Project of power station, for example, was expected to take 5 years and one has only to guess what will happen to the Iranian economy during five years. The same doubts arise in regard to construction of oil pipeline from Iran to Armenia. New oil products, diesel fuel and gasoline, should have been delivered via new pipeline.

US sanctions may infringe investment worth over $20 million as mentioned in the document's text, "directly aimed at strengthening Iran's opportunities to master its own oil resources", as well as cooperation with such financial institutions of Iran, as the Central Bank. And none of the U.S. officials explained whether new Iranian-Armenia oil pipeline would fall under the sanctions.

Time will show where Armenia will come, clinging to friendship with Tehran only because Yerevan cannot establish good neighborly relations with Azerbaijan and Turkey. However time has already showed that one of the poorest post-Soviet republics cannot boast successes in economy and depends on welfare of its diaspora and neighboring Iran.


Elmira Tariverdiyeva /Trend/