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Central Asia: Growing Links Improve Economies

By Vahan Hovaissian

Yerevan, 23 April 1997 (RFE/RL) -- In the post-communist era the countries around the Caspian Sea have been seeking mutual links to improve their mostly difficult economic situations. One grouping that appears to be gaining strength is the triangle composed of Armenia, Turkmenistan and Iran.

An RFE/RL correspondent in Yerevan reports that the three countries are developing cooperation particularly in the fields of energy, transport and banking and also in general trade.

Their efforts to achieve long-term energy integration is evident in both the natural gas and electricity sectors. The gas supply systems of Iran and Turkmenistan, two major producers, are scheduled to be connected to each other in September. Armenia plans to join this system next year, after the necessary construction work is finished. And starting next week (May 1) Armenia will start receiving high-voltage electrical power from Iran via a newly built power line.

The importance of stable energy supplies to Armenia can hardly be overstated. That small country is blockaded along its borders with Turkey and Azerbaijan because of the dispute involving the Azerbaijani enclave of Nagorno-Karabakh, which is populated mainly by ethnic Armenians.

Access to outside markets is therefore not easy for Armenia, particularly as there have also been problems in using the railway northwards through Georgia, where a section of the system has been disrupted through unrest. Therefore Yerevan hopes to reap benefits from another trilateral venture with Iran and Turkmenistan, namely the establishment of a joint transportation company, the headquarters of which will be in the Turkmen capital Ashkhabad.

Iran and Turkmenistan were linked directly by rail a year ago, but although Armenia shares a frontier with Iran, the building of a new rail line across that mountainous stretch is likely to be prohibitive on financial grounds in the foreseeable future. The existing railroad running north from the Iranian city of Tabriz to the Armenian capital Yerevan crosses Azerbaijani territory, and is therefore closed to Armenia.

The benefit of the Yerevan-Teheran-Ashghabad axis is also being felt in general trade. Iran and Turkmenistan are already Armenia's biggest commercial partners, with their trade together exceeding that between Armenia and Russia. Our correspondent reports that 27 percent of Armenian imports last year came from those two partners, to the value of some $250 billion. From Turkmenistan Armenia imports mostly gas, while Iran supplies various commodities and foodstuffs. Our correspondent say that although these Iranian goods are not of high quality, they are much in demand among Armenian consumers because of their low prices.

As to exports, Armenia sent 21 percent of its exports to those two countries in 1996, namely goods valued at a total of $66 billion. Iran received mostly scrap metal, and Turkmenistan, jewellery.

Our correspondent reports that the triangle would like to attract Russia to join them in their economic integration process. The Ambassador of Russia to Armenia participated as an observer in the meeting of three countries' foreign ministers in Yerevan last week (April 15-17).

Our correspondent reports Armenia and Iran are also seeking to develop another program of trilateral cooperation with Greece. He quotes sources at the Yerevan meeting as saying that Greece has enthusiastically agreed to the idea in principle, and that a meeting of foreign ministers of these three countries will take place in Athena in the near future.

Armenia and Greece are already linked in the bigger Black Sea regional grouping of nations. Despite that, our correspondent says the mutual economic links of Greece with Armenia and Iran are not yet very active, and it is likely that the establishment of a basis for such economic cooperation will be a long-term process.