YEREVAN (ArmInfo) — Armenia’s only chance to avoid transport blockade is its full participation in the North-South International Transport Corridor, experts of the Luys Foundation believe.
According to their research, due to objective and subjective circumstances, Armenia was excluded from almost all international transport corridors (ITCs) formed in the South Caucasus. “For obvious reasons, the formed and planned East-West transport corridors bypass our country, and the only hope of not being cut off from regional integration processes is participation in the North-South transport corridor. It was this realization that led to projects such as the construction of the North-South highway, the vision of the Iran- Armenia railway put forward by previous Armenian authorities. After the change of power in Armenia in 2018, no significant steps were taken to overcome the transport blockade of Armenia, as well as the complete or partial loss of control over a number of vital highways as a result of the 44-day war and subsequent events, which further complicated the situation,” the researcher note.
Its authors emphasize that today the RA authorities are trying to present the statement of the leaders of Armenia, Russia and Azerbaijan dated November 9, 2020 as the most realistic plan to overcome the transport isolation of Armenia, they are even talking about the so-called “Armenian Crossroads”. The Luys Foundation has repeatedly referred to the military-political context hidden behind the idea of unblocking communications with Azerbaijan, and the resulting threats to Armenia. Even today, we consider the prospect of restoring transport communications through the territory of Azerbaijan to be unrealistic and believe that even if it is realized as a result of disproportionate concessions on the part of Armenia, this will be associated with a number of risks.
Therefore, even today, the only reasonable solution for Armenia to overcome transport isolation in the region remains active participation in the international North-South transport corridor, redirecting at least the automobile component of the western branch of this international megaproject to the territory of the republic. However, to achieve this goal, it is necessary to accelerate the process of bringing the transport infrastructure of the Republic of Armenia in accordance with the requirements of the MTM. First of all, we are talking about the construction of the North-South highway. As long as the benefits of Armenia’s membership in the EAEU and the development of relations with the European Union remain, it is more realistic to find foreign investors to implement these projects,” the study notes.
On the other hand, one should not wait with great enthusiasm and artificial optimism for the vague process of the so-called “unblocking of roads,” but present it as an alternative to long-term plans to update one’s own infrastructure and ensure normal transport links with Iran and Georgia. Even if these alternative routes are opened, they will depend on the military-political interests and calculations of Turkey and Azerbaijan, with the prospect of being closed at any time and putting additional pressure on Armenia. If you imagine for a moment that part of the North-South cargo transportation will be transferred from the directions of Iran and Georgia to the territory of Azerbaijan and Turkey through the territory of Armenia, then you can imagine what an excellent political instrument it will become if it ends up in the hands of the latter, especially in the absence of a normal alternative.
The project for the construction of the North-South highway cannot be implemented in a short time only at the expense of the state budget of the Republic of Armenia, therefore, for its implementation it is necessary to attract appropriate foreign investments. However, this does not mean that state participation should be small; on the contrary, the state should take the initiative and make a large contribution to the implementation of the project. China can become one of the important sources of financing for the North- South project in Armenia.
According to forecasts by the International Monetary Fund, China intends to invest $35 billion in the countries of the South Caucasus and Central Asia in the coming years. Chinese companies already have experience participating in the construction of some parts of the project, but their participation needs to be increased. To this end, Armenia should try to intensify its participation in the Belt and Road project initiated by China. We are currently seeing Georgia and Azerbaijan actively using this program, which has led to a significant increase in Chinese investment in these countries in recent years. The best way to rectify the situation may be the active and high participation of Armenia in the next summit within the framework of the Belt and Road project, scheduled for the fall,” the foundation’s experts emphasize.
They also draw attention to the fact that the functioning of a free trade zone on the North-South route will significantly reduce transport costs of EAEU-India trade. A possible free trade agreement with India could provide an additional boost to bilateral trade. This means that India could also become a serious investor in the project.
One of the advantages of the North-South highway may be the fact that currently only 2-3% of cargo is transported by rail in Iran. In other words, until the completion of the Rasht-Astara section of the Iranian railways, rail freight traffic constitutes only a small part of the country’s freight traffic. More than half of Iran’s truck fleet consists of obsolete vehicles 30 years old or older. This means that with the construction of the North-South road, Armenia will not only be able to offer Iran suitable infrastructure, but also Armenian freight companies will be able to participate in the transportation of Iranian goods. This could also create opportunities for logistics organizations operating in the EAEU to invest in Armenia.
Moreover, the question remains whether, even after the construction of the Rasht-Astara railway, rail freight transport by road will remain out of competition. “Given the peculiarities of Iran, where, thanks to government subsidies, the price of 1 liter of gasoline in the domestic market is only about $0.05, and roads are in good condition, road freight transportation will in any case continue to grow, maintaining its competitiveness. Taking into account the above, as well as taking into account regional and geopolitical factors, it can be assumed that if there are normal roads on the territory of the Republic of Armenia, Iran will be interested in carrying out part of the cargo transportation through the territory of the Republic of Armenia. Armenia can also count on the support of the EAEU in the development of its infrastructure. The Republic is the only EAEU member state that does not have direct railway connections with other members of the union.
Considering the need to organize effective transport links between the EAEU member states, the restoration of direct railway links with Armenia can be considered one of the priorities of the coordinated transport policy of the EAEU. However, it will be very important how Armenia’s relations with the EAEU member countries will develop, first of all, what will be the course of Armenian-Russian cooperation. In general, Armenia’s transport isolation in the region is one of the main challenges for the country’s economy and security, against which Armenia’s arsenal of weapons is not very rich. In order to avoid final isolation, it is necessary to accelerate the construction of the North-South road, making its speedy implementation one of the most important tasks on the national agenda,” says a study by the Luys Foundation.