Iran Sets Sights on Armenia

By Alireza Ramezani, for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iran Business News.

If one thing is certain about Iran’s recent move to step up relations with Armenia, it’s that it’s for very good economic reasons.

On Oct. 14, Tehran took the opportunity of impending sanctions relief under the nuclear deal signed in July to send First Vice President Eshaq Jahangiri to Armenia to see about expanding bilateral economic relations. Armenia is the sole Eurasian Economic Union member state that shares a land border with Iran, and could thus be a “gateway for Iranian goods” to the 5 billion-strong markets of Eurasia and Europe, according to Jahangiri, the most senior Iranian official to have visited Yerevan since 2011.

Iran and Armenia have already signed agreements that could keep their ties close for years. For instance, Armenia is providing Iran with electricity in exchange for natural gas imports. The swap is set to continue for the next 15 years, with the electricity generated from power plants built by Iranian engineers on the Armenian side of the border.

Under the 2007 gas pipeline contract, Armenia generates and sends to Iran three kilowatt-hours per cubic meter of natural gas. When this contract expires, Iran will get paid for its natural gas exports, and Armenia will be free to use the generated electricity entirely for domestic consumption. It should be noted that Armenia’s political disputes with Azerbaijan and Turkey have left it with Georgia and Iran as the best options for meeting its energy needs.

Jahangiri’s recent visit was mainly aimed at reviving Iranian projects suspended due to sanctions and a shortage of financing. The delayed projects include a high voltage transmission line, connecting the Armenian power grid with that of Georgia and a third transmission line between Iran and Armenia worth around $120 million.

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