Trouble in the neighborhood: Economic concerns about conflict in Iran
Experts in Armenia say military conflict between the United States and Iran would have an adverse effect on Armenia’s economy and trade.
Even though overland trade between Iran and Armenia has been steadily decreasing since 2000, Iran remains Armenia’s second largest trade partner – primarily because it is one of only two neighbors whose borders are open to Armenia.
Now trade between the two countries reaches some $250 million, with Iranian imports representing four-fifths of that amount and only $50 million is Armenia export, according to the Chamber of Industry and Commerce. And even though Iran is second only to Russia in trade with Armenia, Armenian markets carry more Russian, Ukrainian and Turkish (despite “closed” borders) products.
Sevan Sarukhanyan, deputy director of the Noravank Foundation providing analyses of international and regional developments, says that undoubtedly military operations against Iran would economically impact Armenia. But any damage would not be nearly as severe as it might have been a decade ago.
Armenia’s trade has been subjected to considerable diversification since the 1990s and now there is nearly no critical assortment of commodities imported to Armenia from Iran. (Armenia mostly imports foodstuffs, such as animal fat, vegetable oil, fruit, cheap consumer goods and household items, which are on sale in shops and markets. Some four dozen Iranian firms have offices in Armenia, mainly representatives of consumer goods producing companies and food exporting companies.
Sarukhanyan says any trade interruption with Iran could likely be made up by similar goods from Georgia.
He is not so optimistic, however, about the impact of conflict on the new Armenia-Iran gas pipeline.
“A war would not have consequences for trade in common goods, such as food and light industry products, but would entail heavy losses for the energy sector which the two countries hope will soon become the main sphere of Armenian-Iranian cooperation,” Sarukhanyan says. “The projected gas pipeline also has prospects of being extended towards Georgia and possibly to Europe.”
“Energy is the driving force in Armenian-Iranian relations and other areas will follow it,” Armenian President Robert Kocharyan said in one of his recent interviews when asked about relations with the southern neighbor.
While no gasoline is imported to Armenia from Iran, possible action against the neighbor would likely drive oil prices up on the world market and importers and motorists in Armenia fear that gasoline, now about 85 cents per liter in Armenia, may increase to as much as $1.50.
But beyond those losses Sarukhanyan says more detrimental would be possible military clashes in northern Iran or separatist movements in Iranian Azerbaijan. The analyst is also concerned that conflict in Iran might somehow lead to renewed fighting in Karabakh.
Statistics show that the flow of Iranian-Armenians to Armenia has increased in recent years, bringing immigrants who, Sarukhanyan says, are well established and make investments in Armenia.
Conflict in Iran would likely boost that trend and, Iran’s loss of human resources would become Armenia’s gain, “however, the whole institutionalization of one of the most organized Armenian communities in the world will face a risk of disappearing.”
Any changes in relations with Iran would likely not have great consequence on border communities along the 40 kilometers of shared territory with Iran. While all the overland trade with Armenia enters through Syunik, the region is little more than a gateway and has no significant livelihood connected to the transport. A difference would likely be felt at markets in border towns such as Meghri, however, as they would find themselves on the far end of imports (coming from Georgia via Yerevan) rather than the front.
Sarukhanyan says the effect of possible UN economic sanctions against Iran limiting its economic relations with the rest of the world, and primarily with its neighbors, such as Armenia will be more or less the same for Armenia as in the case of military operations against its southern neighbor, as in that case Georgia will become Armenia’s only reliable gateway.
As for stronger economic relations with Georgia in that event, Sarukhanyan tends to call it stronger dependence on Georgia as “the Armenian-Georgian border will become the ‘border of life’ for Armenia and in case of any military clash with Azerbaijan over Nagorno-Karabakh, the closure of the Armenian-Georgian border will prove destructive for the nation. “We already felt the consequences of problems in Georgia during the Karabakh war,” Sarukhanyan concluded.
By Suren Musayelyanwww.armenianow.com
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