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Caucasus: Iran, Armenia Seeking Closer Relations

Armenia and Iran are seeking to expand their economic contacts to give new momentum to what they describe as a strategic partnership. Both countries appear to have something to gain from closer ties.

Yerevan, 25 January 2001 (RFE/RL) -- Armenia and Iran are seeking to expand their economic contacts to give new momentum to what they describe as a "strategic partnership."

Senior officials from the two neighboring nations pledged last night to press ahead with several major commercial projects and more than double bilateral trade.

The two governments reaffirmed their commitment to build a strategic pipeline carrying Iranian natural gas to Armenia. They also agreed to open Iranian markets to Armenian products.

The agreements were contained in what was called a "memorandum of mutual understanding" signed by Iranian Finance and Economy Minister Hossein Namazi and Armenian Energy Minister Karen Galustian at the end of a five-day meeting.

Speaking at a joint news conference in Yerevan, Namazi said:

"We hope consistent work will enable us to use the capacity and potential of the two countries for enhancing bilateral cooperation."

The two sides agreed to set up an ad hoc working group to coordinate construction of the gas pipeline on both Armenian and Iranian territory. No dates were announced for the start of construction work. Galustian said each country will be responsible for its section of the 140-kilometer pipeline.

The biggest problem so far has been obtaining the estimated 26 million dollars needed to build the line on the Armenian side. The Armenian government hopes to secure most of the funds from the European Union in return for closing down the Metsamor nuclear power station in the next few years. The EU has already allocated three million euros (more than three million dollars) for technical and legal preparations for launching the project.

A representative of the European Commission in Yerevan, Sebastien Dubost, told our correspondent that energy officials from the EU and Armenia will meet soon to work out all the terms of Brussels's participation in the undertaking.

Armenian and Iranian officials also agreed to continue feasibility studies on building a hydro-electric power station on the Arax River, which marks the border between the two states. Armenian minister Galustian said private companies from third countries are taking an interest in the project. He said:

"We have been working with a number of major firms that are interested not only in financing the plant's construction, but also in owning some shares in the venture."

In addition, it was announced Armenia and Iran will nearly double the seasonal swap of electricity which they have engaged in since connecting their power grids several years ago. Namazi said government experts will also look into the possibility of opening a facility in Armenia to refine Iranian crude oil.

Iranian and Armenian officials were unanimous in describing the relationship between the two states as strategic. Meeting Namazi on Tuesday, Armenian President Robert Kocharian said Yerevan and Tehran are "strategic partners" in the volatile South Caucasus.

Namazi seemed highly satisfied with what he heard from Kocharian. He said:

"I am glad that the distinguished president of the Republic of Armenia stated what I said at today's meeting of the commission: that all our agreements should be consistently implemented."

For some Western observers, Iran's attitude toward Armenia, its sole Christian neighbor, is proof Tehran's foreign policy is more pragmatic than ideological. Iran's relationship with Armenia is far warmer than it is with Azerbaijan, where -- as in Iran -- Shiite Islam is the dominant religion.

For now, Iran and Armenia see closer economic cooperation as the best way to cement their unofficial alliance. Namazi said agreements reached in Yerevan could boost the volume of bilateral trade from about 100 million dollars last year to some 250 million dollars this year.