Looking at Armenian-Iranian Relations Through a Russian Lens

The late January visit to Armenia by Iranian Foreign Minister Javad Zarif got little media attention, but it could have significant ramifications for geopolitics in Eurasia. Specifically, the trip could help Russia gain a trade outlet that softens the blow of Western sanctions.

Zarif's two-day stay in Armenia had all the usual diplomatic pomp and promises. It came on the back of an October visit to Tehran by a high-ranking delegation led by Prime Minister Hovik Abrahamyan. In Yerevan, Zarif met his counterpart Eduard Nalbandian and President Serzh Sargsyan. The statements that followed those meetings included plenty of the usual diplomatic rhetoric. But they also contained hints that the trip was more than mere diplomatic reciprocity.

Most significantly, Zarif said Iran has "no restrictions" in developing ties with Armenia, highlighting two areas in particular - transportation and trade. On both fronts, the role of Russia looms large. First, both Tehran and Yerevan have emphasized the need to make progress on the construction of the Southern Armenia Railway, a project that would better link the two countries. On the issue of trade, Zarif praised Armenia's accession to the Russia-dominated Eurasian Economic Union (EEU) and pointed to it as a potentially important development for Iran.

According to Russia's Interfax news agency, Zarif touted the EEU as providing "broader cooperation options to Iran, Armenia and Russia." Iran's ambassador to Moscow, Mehdi Sanai, earlier had said Tehran would look into signing a memorandum of understanding in 2015 on trade with the EEU. Such an agreement could spur an increase in Iranian exports to Russia. Sanai has been on record as saying Iranian-Russian trade should jump from the present $3-5 billion annually to $70 billion per year.

While Sanai's suggested trade volume target may be far from realistic, a desire to achieve even an incremental increase in Iranian-Russian trade requires the two countries to significantly expand transportation links. At the moment, there is not even regular air cargo service between Iran and Russia.

This is where a Russian angle to the construction of the Southern Armenia Railway is apparent. As Prime Minister Abrahamyan put it, "Iran and Armenia can jointly produce agricultural products and export them to Eurasia" via the proposed rail project. However, both Moscow and Tehran evidently have much greater ambitions than just providing an outlet to and from the small Armenian market. Iran's trade with Armenia is only about $300 million per year, a tiny share of its overall trade.

The 470-km rail project, which was first proposed in 2010 and has remained largely on the drawing board since then, is seen as a missing link in a North-South Eurasian trade corridor connecting the Persian Gulf to the Black Sea. Its construction would give both Iran and Russia an important alternative outlet for trade. The significance of the project is also reflected in President Vladimir Putin's announcement back in September 2013 to contribute $429 million in financing for the multi-billion-dollar rail project. Given its current economic woes, there is no longer a guarantee that Russia could follow through on Putin's pledge. Still, Russian diplomatic and economic interests in Iran are intensifying.

The statements made during Zarif's trip to Yerevan are better understood when Russia's regional role is taken into account. Since Armenia regained independence in 1991, Russia has served as a geopolitical protector for Yerevan. And thanks to the EEU and to Russia's acquisition of strategic economic assets in Armenia over the past decade, the Kremlin is in position to play economic kingmaker for the South Caucasus country.

Meanwhile, Iran has played a complementary role to that of Russia as far as Armenia is concerned. Tehran has served as Armenia's most reliable trade outlet to the world since 1994, when Turkey and Azerbaijan imposed a blockade. In addition, Iran has tended to favor Armenia, and not fellow Shia Azerbaijan, in the search for a lasting political settlement to the Nagorno-Karabakh conflict.

Two factors are driving Iran's desire for closer ties to Armenia. First, Tehran has from early on resented Azerbaijan's relatively strong relationship with the United States and European Union, and is particularly alarmed by Baku's growing contacts with Israel. While Iranian-Azerbaijani relations have improved in recent months, Tehran remains wary of Baku's intentions.

Second, Tehran has made a strategic decision not to challenge or upset Russian interests in Moscow's self-defined "near abroad." For Iran, Russian goodwill is important in light of Tehran's troubled relations with the Western world.

Ultimately, when it comes to Armenia, Iran has pursued a policy that is deferential to Russian interests. In cases where Russians interests have been at stake - when, for example, Iran and Armenia pursued joint energy projects that would circumvent Moscow - the Iranians have been quick to back down in the face of Kremlin opposition.

These days, when it comes to Iranian-Armenian ties, Russian calculations are straightforward: given the rising tension between Moscow and the West over Ukraine, the Kremlin wants to secure alternative trade partners. As long as Russia believes closer Armenian-Iranian ties serve its interests, the momentum that Zarif and his hosts in Yerevan spoke about stands a good chance of building.