Dr. Hassan Rouhani, President of the Islamic Republic of Iran, is leaving for Yerevan today to attend the Eurasian Economic Union summit in Yerevan, which presence in the summit will have important political and economic implications.
Iran's presence in the Eurasian Union will not only boost trade with the member-states of the Organization but will also strengthen Tehran's ties with its members, including Russia. Given that Armenia is the only member of the union that shares a land border with Iran, strengthening Tehran-Yerevan relations would not only serve the national interests of the two countries but could also serve as a bridge between Iran and Eurasia.
Since the independence of Armenia in 1991, the political, economic and cultural ties between Yerevan and Tehran have been gradually developing based on an active dialogue and close cooperation in various fields. Armenia borders with an area of about 30,000 square kilometers and a population of about three million in the Caucasus region is bordering Turkey, Georgia, Azerbaijan, and Iran.
According to information provided by the Armenian Ministry of Economic Development and Investment, 5301 Iranian-invested companies (mostly entrepreneurs) have been registered in Armenia by January 1, 2019. This is 36.6% of the total number of companies registered in Armenia. Major companies with Iranian capital have been active in information technology, industries, construction, real estate, commerce, agriculture, tourism, and transportation.
Armenia's trade with Iran increased by 40.5% in 2018 compared to 2017. Exports from Armenia to Iran in 2018 were about $94.2 million, up 12% compared to 2017. Armenia imports from Iran totaled $269.4 million in 2018, up 54.2 percent from a year earlier.
Iran-Armenia on path of strategic relations
Iran and Armenia, which have been in friendly relations for decades, began a new chapter in bilateral relations in 2018, as the two countries are taking steps in the direction of a strategic relationship. Iran was named as Armenia's 6th most important trading partner in 2017, but in 2018 Iran was promoted to Yerevan's fifth most important trading partner.
Since his appointment, Armenian Prime Minister Nikol Pashinyan has always emphasized on expanding relations with Tehran in various areas, especially the economic sector. Iranian and Armenian officials have repeatedly emphasized that bilateral economic relations have great potential and capacities to be used in the direction of further development of economic exchanges. Pashinyan traveled to Tehran in March and held meetings with senior officials of the Islamic Republic of Iran. While welcoming the all-out expansion of bilateral relations, he underlined that relations with Iran are an important part of Armenia's foreign policy.
Among the achievements of the trip was the signing of a Memorandum of Understanding between the National Iranian Standard Organization and the Ministry of Economic Development and Investment of Armenia, as well as another Memorandum of Understanding between the Supreme Council of Free Zones of Iran and the Ministry of Economic Development of the Republic of Armenia.
One of the main topics discussed during Pashinyan's meetings with Iranian officials was cooperation in the IT sector, which the Iranian president reiterated, Tehran is ready to export new technologies to its northern neighbor.
During a meeting with Pashinyan last year, Dr. Hassan Rouhani emphasized the necessity of developing Iran-Armenia cooperation in political, economic and international spheres, stating that the serious intention of the Islamic Republic of Iran is to exponentially strengthen its relations with Armenia as a friendly and neighboring country. The Iranian president had stated that the Iranian people have very good historical and cultural relations with the Armenian people, and the two countries have great potential for cooperation, in addition to the neighborliness.
Iran and Armenia are seeking to expand bilateral trade to over $320 million, which could take a step in the path of developing relations in areas such as agriculture, animal husbandry, increased gas and electricity exchanges, and energy.
Armenia has the potential to become one of the main routes of transit of energy and commodity supplies from the Persian Gulf to the Black Sea and from there to European countries. Armenia has become an important player in the Persian Gulf-Black Sea corridor as the shortest strategic route for EU access to Asian markets and vice versa. This could be an important issue for Iran in these economic conditions. Expanding activities in the Meghri free economic zone will also be one of the steps towards expanding economic relations.
One of the main priorities in the development of economic relations between Iran and Armenia is Iran's access to the Eurasian market through Armenia. This country could become an important new export and import route for Iran. In the face of sanctions, it is possible that Iran may also move forward with expanding economic relations with the Eurasian Union member states, but serious action must be taken to take advantage of this potential. In this regard, infrastructure conditions along the transit path between the two countries should also be improved. Armenia can also become a country for the transportation of Iranian gas to other countries as well as Europe.
Iran's gas exports to Georgia via Armenia are highly likely, especially since the move was tested during the tenure of former Armenian Prime Minister Hovik Abrahamyan. At that time, a small amount of Iranian gas was exported to Georgia via a private company in Georgia.
Technically, it is also possible to transfer Iranian gas to other countries via Armenian soil. Transmission and gas discharge capacity from Iran to Armenia is about 2.3 billion cubic meters annually, while currently only 15% of this capacity is used. Serious investments are needed to transport Iranian gas to Europe via Armenian soil.
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