Chinese Investors Show Interest in Armenia-Iran Railway

Senior executives from the Dubai-based investment company Rasia and China Communications Construction Company meet with Prime Minister Tigran Sargsyan in Yerevan

YEREVAN (RFE/RL)—Chinese investors are ready to finance an ambitious $3 billion project to build a railway connecting Armenia to Iran that could be launched in 2016, according to the Armenian government.

The 470-kilometer railway, which would mainly pass through Armenian territory, has been planned by the two neighboring states ever since the late 1990s. The project was formally approved by the Armenian and Iranian governments in 2009. But it has yet to get off the drawing board mainly because of their failure to attract funding for the Armenian section of the strategic transport link.

Rasia FZE, a little-known investment company based in Dubai, was granted in 2012 a 50-year concession to build and manage the 305-kilometer section to be named the Southern Armenian Railway (SAR). Rasia in turn contracted the China Communications Construction Company (CCCC) group to conduct a feasibility study and recommend a cost-effective route for the railway.

Joseph Borkowski, the Rasia chairman, presented the final results of the study to Prime Minister Tigran Sargsyan at a meeting in Yerevan on Tuesday. According to Sargsyan’s press office, the CCCC estimates the total cost of railway construction at $3.2 billion, a sum equivalent to Armenia’s entire 2014 state budget.

Armenia – Senior executives from the Dubai-based investment company Rasia and China Communications Construction Company meet Prime Minister Tigran Sargsyan in Yerevan, 18Feb2014.Armenia – Senior executives from the Dubai-based investment company Rasia and China Communications Construction Company meet Prime Minister Tigran Sargsyan in Yerevan, 18Feb2014.

“According to the submitted program, the construction work may start in 2016 and end in 2022,” the office said in a statement. It said Sargsyan stressed the need for drawing up a “roadmap” to the project’s implementation.

Sargsyan and Borkowski already discussed the CCCC’s findings when they met last September on the sidelines of an international economic forum held in the Chinese city of Dalian. A statement on that meeting released by Rasia said the government-controlled Chinese firm believes in the “strong economic viability and regional importance of the railway.”

“As the key missing link in the International North-South Transport Corridor, the Southern Armenia Railway will create the shortest transportation route from the ports of the Black Sea to the ports of the Persian Gulf,” said the statement. “The Southern Armenia Railway will establish a major commodities transit corridor between Europe and the Persian Gulf region, with conservative long-term traffic volume forecasts of 18.3 million tons per annum.”

The railway would mainly run through Armenia’s mountainous Syunik province bordering Iran. Hence the very high cost of construction, which has long raised doubts about its feasibility. “The railway will have 84 bridges spanning 19.6 kilometers and 60 tunnels of 102.3 kilometers, comprising 40 percent of the total project length,” Rasia said in September 2013.

Sargsyan’s office quoted Borkowski as saying on Tuesday that his Dubai-based company is already looking for international investors interested in the project. “It was pointed out that Chinese banks … have expressed readiness to finance 60 percent of the project,” it said without elaborating.

Armenian officials have previously referred to Russia as another potential source of funding. The Russian government and RZhD national rail company have not ruled out such possibility.

The issue was apparently on the agenda of September 2013 talks near Moscow between the Armenian and Russian presidents that were followed by the announcement of Armenia’s unexpected decision to join a Russian-led alliance of ex-Soviet statements. In a joint communique, they pledged “the continuation of joint efforts to realize infrastructure projects, including railway communication, as well as the construction of new logistical and communication routes.”

Still, the Russians have so far made no formal commitments on the Armenia-Iran rail link, which is also strongly supported by the Iranian government. The Iranian ambassador to Armenia, Mohammad Reisi, said earlier this month that the expensive project will feature large at the next meeting of an Armenian-Iranian intergovernmental commission on economic cooperation.

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8 Comments

  1. Armenian said:

    Let’s get moving on this. It would be an excellent opportunity for us to get something out of it, and show Russia that she is not our only option in terms of foreign relations. I hope the Russophiles in Armenia and the in the diaspora (ironically enjoying life and prosperity from the comfort of their Western homes, condemning the people in Armenia to their one-sided and half-baked decision making inabilities) don’t obstruct this for Moscow’s sake.

  2. GeorgeMardig said:

    China can’t help Armenia in security as much as Russia, until war dangers have not disapeared, only Russia can guarantee a safe Armenia

    • Armenian said:

      Why is everything Russia or bust for you? Why is this mindset of “Russia or Die” so prevalent amongst Armenians? Half of Russia’s abilities to get whatever they want from us comes from this self-imposed fear that without Russia, the world will collapse on us. Again, I agree that Russia is important and should be a top priority for Armenia, but only on certain issues and it is especially important that Moscow be kept at a comfortable distance. Also, you do realize that China has internal problems with its ethnic Turkic groups, most of which are covertly being backed by Turkey in order to gain influence in that region. If the idiotic Armenian government did some research and pitched this as a danger to China and somehow tried to tie the threat of Pan-Turkism into this, we could be able to gain something.

      Stop saying nobody but Russia “can/can’t” do anything. You don’t seem to understand how much that limits us in every way, including in the mentalities of our ordinary citizens. I’ve said it before and I’ll say it again: Russia is not salvation. Russia is a country with its own interests that are can, at times, be completely separate from ours. There is a world outside of Russia, be a bit smarter about it and Armenia could eventually benefit from the interests of mutual cooperation (and not servitude) with Armenia.

  3. Armenian said:

    I’d like to add that Iran should also be a top priority for Armenia, and I am amazed that the government is literally passing up every opportunity being offered to us by Tehran, including a great deal on natural gas. Iran has tremendous potential, especially if the West starts opening up to it. Now this does not mean that we should start selling everything we own to the Irans, like we did with the Russians, but build a very strong partnership that is maintained by a comfortable distance. A strong partnership with Iran and an open society towards the West in that country would put Azerbaijan in an even less valuable position to NATO and the US, and our ties with Tehran could serve as a deterrent to their ventures in the Caucasus. We shouldn’t look to just Russia to help keep us safe, but we should look to build strong ties with other countries who may have even more personal qualms with the Turks and Azeris than the Russians would, Iran being one of those countries.

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