By Benyamin Poghosyan
A New Route to Connect India with Europe via Armenia
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| Cover Image Attribute: Norduz Border Terminal at Iran-Armenia Border. / Source: Morten Knutsen via Flickr / Date: April 12, 2008 |
The COVID–19 and the war in Ukraine have triggered the disruption of global supply chains forcing states to look for alternative transport routes to conduct trade and other economic activities. As one of the rising stars of the global economy, which just passed the UK to become the fifth largest economy in the world, India has looked for ways to expand its connections within Greater Eurasia even before the Pandemic and the Ukraine war. Given the increasing volume of cargo passing through the Suez channel, and the 2021 incident that blocked that waterway, India's primary task is establishing new routes to circumvent Suez while reaching Europe. In September 2000, India, Russia, and Iran declared their intention to establish an International North-South Transport Corridor (INSTC) to connect India with Russia and Northern Europe via Iran. Several other countries joined the project later, and currently, three routes are being discussed as a part of that corridor. The western route will pass via Iran and Azerbaijan, Trans-Caspian route will connect the Caspian Sea ports of Russia and Iran, and the Eastern Route will pass via Iran, Turkmenistan, and Kazakhstan.
India has chosen the Iranian port of Chabahar as an entry point for Indian goods to reach Iran. In 2003, India announced plans for investment in the Chabahar Port, signing a memorandum of understanding with Iran in 2015. The project gained traction in May 2016 when Prime Minister Modi announced that India would invest US$500 million in developing the Chabahar Port. The US withdrawal from the Iran nuclear deal in 2018 and the re-imposition of American sanctions created severe obstacles to the development of Chabahar port. In 2019 India secured exemptions from US sanctions, but the fear of secondary sanctions has made procuring equipment from private infrastructure companies challenging.
Meanwhile, as India struggled to keep up with its plans to develop the Chabahar port and transform it into the central Iranian hub for the INSTC, the war in Ukraine and the complete rupture in Russia – West relations made large-scale trade with Europe via Russia almost impossible. It is too challenging to predict the future course of the war in Ukraine, which means that INSTC may work only partly. It may establish an alternative route for India to connect with Russia but not with Europe.
Meanwhile, since 2016, Armenia, Azerbaijan, Iran, Georgia, Bulgaria, and Greece have been negotiating the launch of the "Persian Gulf-Black Sea multimodal transport corridor" to connect Iran with Europe. The US withdrawal from the Iran nuclear deal and re-imposition of American sanctions created obstacles for this project, but the project is still significant and under consideration. It will connect Iran with Georgian Black Sea ports via Armenia and/or Azerbaijan. Cargo will then reach the Bulgarian ports of Varna and Burgas via Greece to wider Europe.
As India looks for alternative routes to reach Europe that may bypass both the Suez channel and Russia and has already looked to Iran as a transport and transit hub for Indian trade within Eurasia, the Persian Gulf - Black Sea corridor fits well into Indian strategy of creating a viable alternative route to Europe. One of the questions facing the Black Sea - Persian Gulf corridor is the route connecting Iran with Georgian Black sea ports. Cargo may reach Georgia from Iran via Armenia, via Azerbaijan, or passing both countries. However, given the growing tensions between Iran and Azerbaijan due to Azerbaijan – Israel strategic cooperation and Iranian concerns that Israel and the US use Azerbaijan as a launching pad for anti-Iranian activities, including triggering separatism in Azeri-speaking areas of Iran, Iran would be extremely cautious about choosing Azerbaijan as a transit route for Persian Gulf – Black Sea corridor. Iran would not appreciate giving additional leverage to Azerbaijan, which Baku may use to press Iran.
Given the rapid development of the Azerbaijan–Turkey–Pakistan strategic partnership, as well as the hardline anti-Indian policy of Turkish President Erdogan, probably, India would not like to see Azerbaijan as a route for both INSTC and the Persian Gulf–Black Sea corridor. As the inclusion of Azerbaijan into the Persian Gulf – Black Sea corridor is problematic for India and Iran, Armenia appears as the right choice to be included in the emerging transit routes connecting Iran with Georgian Black sea ports and India with Europe from a broader perspective. Armenia has developed friendly relations with Iran since gaining independence in 1991. Iran is one of the staunchest supporters of Armenia after the 2020 Nagorno-Karabakh war, resisting Azerbaijani claims to establish a "Zangezur corridor" via Armenia to connect with Turkey. This corridor, if created, will pass through the Syunik region of Armenia, thus jeopardizing a 40 km long Armenia–Iran land border.
At the same time, the Armenian and Indian nations share a long history of friendly interactions. During their millennia-long relations, the two countries have never acted against each other. India is increasingly concerned about this growing Turkey–Pakistan–Azerbaijan partnership and views Armenia as a strategic partner to curb Turkey's growing geopolitical ambitions. Recently Armenia and India signed several deals on weapons purchases, bringing Armenia – India partnership up to a strategic level.
Thus, India and Iran have arguments for choosing Armenia over Azerbaijan as a transit country to connect India with Europe via Iran, Georgia, and the Black Sea. Meanwhile, the primary challenge for Armenia to become a transit hub for large cargo shipments is the need for a developed transport infrastructure connecting Armenia with Iran. There is no railroad connecting the two countries, and the prominent Armenia–Iran highway has been closed since November 2021 by Azerbaijan, while the alternative highway is not suitable for large-scale cargo transportation.
Armenian government declared its plans to construct a new highway connecting Armenia with Iran through the Southern Syunik region of Armenia. It envisages the construction of several tunnels and bridges to avoid the dangerous serpentines via mountains. Iranian companies have declared their intention to be actively involved in that project. Given the Indian expertise in large-scale infrastructure development, Armenia and India should explore ways to involve Indian companies in constructing the new Armenia–Iran highway. This may also include the provision of an Indian Line of credit to Armenia for that specific project. India's Lines of Credit (LOC) to its neighbors have increased significantly in recent years, from $3.27 billion in 2014 to $14.7 billion in 2020. Recently the EU has increased its engagement with Armenia and declared its intentions to support Armenia's economic development. This includes five flagship initiatives published in July 2021, focusing on transport infrastructure in the Syunik region. Thus, constructing the new Armenia–Iran highway aligns with the EU's regional strategic interests.
Armenia–Iran's new highway will serve the interests of Armenia, Iran, and India and may become a building block for future trilateral partnerships in other areas. As the first step to push forward this project, the Armenian government should organize an international conference emphasizing Armenia's transit role in the Persian Gulf–Black Sea project and in more expansive India–Europe transit with the participation of representatives of governments and construction companies from India, Iran, Georgia, and other interested stakeholders.
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