What Armenia Stands to Gain from Iran’s Nuclear Deal

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Representatives of the Iranian government, along with the six world powers, have finally reached a historic and long-sought-after nuclear agreement. The Iranian nuclear deal seeks to curb nuclear development in the country while removing crippling sanctions on Iran’s economy, which began following the Iranian Revolution and have become progressively more acute ever since.

Needless to say, removal of sanctions will have a monumental effect on Iran. With the ability to significantly increase gas and oil exports, while having its assets in Western banks unfrozen, Iran will see a dramatic rise in its budgetary flexibility. This means the ability to invest in and upgrade many facets of the country. Further, with Western investors hungry for a fairly affluent market of 77 million people who have a natural affinity for Western culture, the economy will experience a notable transformation. Moreover, the ending of the UN arms embargo will allow Iran to modernize its army that – though a formidable force due to its organization and discipline – is hampered by its outdated technology.

Perhaps equally as important as the effects the deal will have on Iran are the reverberations that will be felt throughout the region in neighboring countries, as Iran’s economic and military reach are strengthened. No country will have more to gain from this process than Armenia, for whom Iran has been by far the most cooperative neighbor since its independence.

In the most basic sense, as the Iranian economy grows, Armenia will feel a natural spillover effect. As Iranian domestic goods and companies become more competitive with new foreign investment, cheaper and better products will be introduced to the Armenian market, improving the level of competition and prices in Armenia. This is especially significant given recent reports by both Iranian and Russian sources that Iran is working on a free trade agreement with the Eurasian Economic Union (EEU.) Given that Armenia is the only country near Iran that’s a member of the EEU, it will become an important gateway for Iranian companies to access the more than 180 million consumers of the union.

Further, Iran, who is an observer state of the Shanghai Cooperation Organisation (SCO), is among the next set of nations expected to ascend to member status in the organization. In fact, the main obstacle that has prevented this from happening until now has been the UN sanctions. Given that Armenia already has cordial relations with China, and has just this week become a “dialogue partner” of the SCO, this move is bound to further facilitate economic relations between Armenia and China.

Another important aspect of the nuclear agreement is the financial flexibility that Iran will gain, which will enable the country to carry out many strategic and geopolitically significant infrastructure projects in the region that have been delayed due to financing issues thus far. Among these are several joint projects between the Armenian and Iranian governments such as the Meghri Hydroelectric Dam located in Syunik as well as the Southern Armenia Railway, which will connect the two nations by rail. Considering the strategic gains Iran stands to make by having access to the Caucasus region, it’s reasonable to assume that once it has the necessary budgetary flexibility, the country will help Armenia finance the Southern Armenia Railway. The project, which is estimated to cost more than $3 billion, is one of the biggest priorities of the Armenian government.

Finally, the most important foreign impact for Armenia will be the effects felt in Azerbaijan and Turkey because of the deal. Azerbaijan has gained some minimal international prestige from its ability to contrast itself with Iran – mainly because it has successfully cast itself as a stable and cooperative alternative to Iran for the West. The country has also been long thought of as a key attacking point for any military assault on Iran. Given the improvement in relations between the West and Iran, the significance of Azerbaijan will greatly diminish in that regard. More importantly, given that Iran has the world’s second largest natural gas reserves, or roughly 40 times that of Azerbaijan, its potential to begin exporting to Europe completely diminishes Azerbaijan’s main claim to any political leverage: that of providing an alternative to Russian gas.

Perhaps the most immediate impact on Azerbaijan will be the further decline in global oil market prices, as Iranian oil floods the international market. Azerbaijan has already been dealing with the economic ramifications of energy price declines, from which it derives 74 percent of its budget. It has had to devalue its currency by 33 percent, while having seen its foreign exchange plummet. The introduction of Iranian oil will not only keep these prices low in the immediate future, but is bound to push them further down. This means a wide range of economic and social issues in Azerbaijan, which will naturally affect its ability to pose a military threat to Armenia.

On its Western border, Armenia has had to deal on the international stage with a Turkish nation whose main value to its Western patrons has been the balance it provides against a hostile Iran. If Iran is able to develop into a neutral partner to Western states, world powers will have less of a reason to tolerate the actions of Turkey, who has had its own recent history of hostility and instability.

Without a doubt, Iran’s nuclear deal – and the benefits the country is set to derive from it – will have a positive impact on Armenia. As the Iranian economy grows and as Iran further improves its relations with China and Russia (two key partners to Armenia), Armenia will start to see the economic benefits of a more affluent Iran. Further, the lessening of hostility between Iran and Western states will drastically diminish the value Azerbaijan and Turkey present to the West. That means Armenia’s ability to deal with these two hostile nations diplomatically will only improve.

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11 Comments

  1. Bravo I agree with you , stability will also come in the Middle East if there is a balance of powers .

    • how about you share with us which parts are, quote, “simple minded”.

      maybe we can learn something new. (despite Armenians being, according to you, “PS: Politically, Armenians must be one of the dumbest peoples on earth”).

        • You just did.

          and any adult who uses “LOL” in his/her post like you did is clearly a mental juvenile. Vocabulary challenged ?
          Use “ROFL” next time: more impressive (has 4 letters instead of 3).

          and if you are Armenian, then the statement “Armenians ARE politically dumb” must necessarily apply to you as well, No ?
          If you are not Armenian, then go pound sand: Armenians don’t give a hoot what non-Armenians think of Armenians.

  2. A great perspective. I like to read these types of articles that give a well rounded exposure to the different benefits to such geopolitical issues. Great article Mher.

  3. Mher,
    A thoughtful and carefully scripted piece. Since a major part of my professional life provided me the privilege of working with and serving hundreds of Armenian students and families, my heart and political feelings want to see Armenia develop an economy and fiscal independence away from the Russian Bear.
    Your piece has offered some attainable benefits for Armenia that can occur over time from the resulting Iran Nuclear Deal and I’m energized to absorb those possibilities.
    Now, how do we get the Turks to recognize the Genocide… Thank you, Mher and to Henrik Sardarbegians for posting on FB. Kevin

  4. One should not want Iran to go nuclear because then Turkey will have more motivation to do so. Similarly Azerbaijan.
    Also one does not wish for Azeris in Iran to get hold of such a thing.

  5. It’s always about the money. Never mind the constant threats for the annihilation of Israel and death to America and Iran’s unashamedly support of terror worldwide. At least our economy will grow “until”

    • {“ Never mind the constant threats for the annihilation of Israel and death to America and Iran’s unashamedly support of terror worldwide”}
      .
      There are no constant threats to, quote, “annihilate” Israel by Iran.
      [In a reminder that Persian rhetoric is not always easy for English-speakers to interpret, a senior Israeli official has acknowledged that Iran’s president, Mahmoud Ahmadinejad, never actually said that Israel “must be wiped off the map.”]
      [Last week, Teymoor Nabili of Al Jazeera suggested during an interview with Dan Meridor, Israel’s minister of intelligence and atomic energy, that Mr. Ahmadinejad’s rhetorical flourish had been misinterpreted. “This idea that Iran wants to wipe Israel out,” Mr. Nabili said, “now that’s a common trope that is put about by a lot of people in Israel, a lot of people in the United States, but as we know Ahmadinejad didn’t say that he plans to exterminate Israel, nor did he say that Iran’s policy is to exterminate Israel.”
      In response, Mr. Meridor said that Mr. Ahmadinejad and Iran’s ruling cleric, Ayatollah Ali Khamenei, had said repeatedly “that Israel is an unnatural creature, it will not survive. They didn’t say, ‘We’ll wipe it out,’ you’re right, but, ‘It will not survive.’ ”] (New York Times)
      .
      {“ constant threats…death to America”}
      .
      Please tell us how many Americans have Iranians actually killed.
      Israel murdered 34 Americans in a deliberate, unprovoked attack on USS Liberty and wounded 171 Americans.
      A criminal act.
      Israel murdered American woman Rachel Corrie.
      Any comment ?
      Israel placed a very damaging spy, Jonathan Pollard, in US who caused immense damage to American security.
      Any comment ?
      .
      {“ and Iran’s unashamedly support of terror worldwide”}
      False.
      Turkey, Israel, US, UK, and Saudi Arabia unashamedly support terrorists worldwide: who do you think created and is supporting ISIS, Iran ?
      .
      And please don’t come to an Armenian web site and preach hatred against Iran.
      Armenians and Persians are neighbors and have very friendly relations.
      Going back centuries.
      We don’t cotton to AG denialist Israel sticking its nose into our region.
      Denialist Israel has been supporting genocidal Islamist Turks in their worldwide Armenian Genocide denial campaign.
      You have some nerve coming to an Armenian site and trying to propagandize for Israel.
      .
      One more thing: Armenians and Jewish people are two of kind.
      We both came to the very brink of being wiped out from the face of the Earth.
      In many respects, we are very unique and very much alike.
      But Armenians do not forget that the State of Israel provided material military support to Azerbaijan (1991-1994), while the Turkbaijanis were attempting to commit a 2nd Genocide against the indigenous Armenians of Artaskh.
      .
      Remember that next time you accuse Iran of anything.
      Thank you.

  6. Positive expectations from the loosening or removal of sanctions on Iran are exaggerated, while they won’t have any qualitative impact on Armenian-Iranian relations.

    The reason is that the sanctions affected 4 main sectors of Iranian economy – oil, insurance, technologies (including arms) and financial transactions. The economic cooperation between Armenia and Iran did not involve any of these sectors, with the exception of the financial sector. We did not import oil or oil products from Iran. The insurance industry first of all involved the Iranian oil fleet. As to technological cooperation, Armenia exported virtually nothing to Iran, all the more arms.

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