Armenian Government Settles Dispute with National Railway Network Managed by Russia Company

YEREVAN — After yearlong negotiations with Moscow, the Armenian authorities appear to have agreed to drop criminal proceedings against Armenia’s national railway network managed by the Russia Railways (RZD) giant.

RZD runs the network called South Caucasus Railway (SCR) in line with a 30-year management contract signed with the former Armenian government in 2008. The deal committed it to modernizing Armenia’s disused and rundown railway infrastructure with substantial investments.

An Armenian law-enforcement agency raided the SCR offices in Yerevan and confiscated company documents in August 2018. The Investigative Committee alleged afterwards that SCR inflated the volume of its capital investments by 400 million drams ($830,000).

Both SCR and its state-owned Russian operator strongly denied any wrongdoing. Russia’s Deputy Transport Minister Vladimir Tokarev complained in September 2019 that the criminal investigation has disrupted RZD’s operations in the South Caucasus country. He said the company managing Russia’s vast network of railways is therefore considering pulling out of the 2008 deal.

Tokarev and RZD’s chief executive, Oleg Belozerov, visited Yerevan in October to discuss the dispute with Prime Minister Nikol Pashinyan. No concrete agreements were reported after the talks.

Russian Foreign Minister Sergei Lavrov criticized the “inappropriate” crackdown on SCR in April this year. Armenia’s Deputy Prime Minister Mher Grigoryan dismissed the criticism, saying that his government cannot allow any company to operate “beyond the law.” Grigoyan also said that Yerevan and Moscow have reached a “mutual understanding” on how to end the dispute.

The Russian Ministry of Transport announced on Wednesday that the two sides have “settled all disagreements” over RZD’s activities in Armenia as a result of negotiations led by Tokarev and Armen Simonyan, the Armenian deputy minister of territorial administration and infrastructure.

In a statement, the ministry said a protocol signed by Tokarev and Simonyan certifies RZD’s full compliance with its investment commitments and upholds the findings of independent audits of the Armenian railway conducted since 2008.

“The parties emphasized the significance of the signed document and noted that it will foster the further development of economic cooperation between our countries,” added the statement.

The Armenian Ministry of Territorial Administration and Infrastructure confirmed the signing of the protocol but did not divulge any of its details. It said the deal will help to boost SCR’s cargo shipments and passenger traffic and “refresh its rolling stock.”

Grigoryan openly voiced last October the Armenian government’s dissatisfaction with the amount of Russian investments in SCR.

No senior SCR executives are known to have been formally charged in the criminal investigation launched three months after the 2018 “Velvet Revolution” that brought Pashinyan to power.

Later in 2018, law-enforcement authorities also launched a fraud inquiry into Armenia’s gas distribution network owned by Russia’s Gazprom giant. They have not indicted any senior network executives either. Russian officials have complained about this probe as well.