BACKGROUND: Being surrounded from three sides by hostile or unreliable neighbors, the operational pipeline will meet Armenia’s gas requirements from a friendly neighboring supplier, while significantly increasing Iran\'s gas exports now mainly limited to its uncertain exports to Turkey. The pipeline, which could be extended to Georgia and Ukraine, could go even farther to reach Central and Western Europe via Ukraine. If fully implemented, this will not only increase Iran\'s gas exports substantially, but it will drastically boost the importance of Armenia and Georgia and, by default, the South Caucasus, as a main export route for fossil energy to supply the European economies. Armenian-Iranian relations have been on the expansion track since Armenia’s independence in 1991 for various reasons. Against a background of historical ties and the existence of Iranians of Armenian origins who have kept a degree of contact over centuries between the two nations even during the Soviet era, political realities, economic imperatives and security considerations have inclined Yerevan and Tehran to seek close relations. Being a landlocked country, Armenia’s surrounding by two hostile countries (Azerbaijan and Turkey) to its east and west and an unreliable neighbour (Georgia) to the north makes its southern neighbour (Iran) the only reliable outlet for accessing the open seas and regional and international markets, added to its need for importing fossil energy from a secure supplier. Concerned about the resumption of war with Azerbaijan over the disputed Azerbaijani territory of Nagorno Karabakh with a possibility of dragging Turkey into the conflict, Armenia also needs Iran’s close and friendly relations as a regional power to deter such scenario. As for Iran, close and cordial relations with the three Caucasian states have been important as, besides economic interests in the Caucasus, the region provides a land link between Iran and Europe, a necessity for the Iranians to reduce their heavy reliance on Turkey for that matter. Preventing the region’s domination by hostile America has also been another incentive for Tehran to forge friendly ties with the regional countries. Given the extensive and growing relations, including military ones, between Washington and Baku and Tbilisi, close ties with Yerevan, which has sought strong relations with both Tehran and Moscow while having friendly relations with Washington, is of special importance for the Iranian government.

IMPLICATIONS: Against this background, the interest of both Armenia and Iran for constructing a gas pipeline is quite understandable. Lacking any significant fossil energy resources, Iran is the most logical long-term supplier of gas and oil for Armenia whose exports to that country does not require the consent of Armenia’s other neighbours. The possibility of the pipeline’s continuation to Georgia and Ukraine – both of which have already expressed an interest in the scenario – creates an additional motivation for the Armenians who could economically benefit of such scenario by providing a major, and potentially the major, route for Iran’s gas exports, while creating stakes for Georgia in maintaining good ties with their southern neighbour. Moreover, its potential to become a pipeline to supply the European Union (EU) with Iranian gas makes its construction even more interesting for the Armenians. The EU has been keen on importing gas from Iran as a means to secure adequate number of suppliers for its increasing gas requirements, to diversify its gas suppliers and thus to reduce its heavy reliance on Russia and certain North African countries for its gas imports. Brussels has given serious thoughts, including a feasibility studies undertaken over a year ago, about connecting the existing Iranian-Turkish gas pipeline to Europe via Greece and/or Bulgaria. Various factors, including Ankara’s twice closure of the pipeline since its inauguration in 1993 because of its disputes with Tehran over the amount and pricing its gas imports, and Brussels’ political considerations, have prevented the project’s realization. In the absence of those considerations and provided the prevalence of durable peace in the Caucasus, the Caucasian export route could have a better chance to become a reality if the current Turkish-Iranian disagreements on gas exports continue.

CONCLUSIONS: The recent enthusiasm of Yerevan and Tehran for constructing the gas pipeline and the involvement of two Russian gas companies in the initial phase of its implementation are good signs as they create hope for its actual construction. However, in the absence of a firm construction schedule, it is still a little too early to consider the recent developments as a clear sign for the project’s implementation. There is no question that both the Armenians and the Iranians are determined to make this happen, while having the blessing of the Russians as reflected in the mentioned involvement of their gas companies. Russia’s potentially troublesome ties with Georgia make it an unlikely long-term supplier of gas and oil to Armenia as it can only access the latter via Georgia, given the hostile state of relations between Azerbaijan and Armenia whose future is anyone’s guess. This explains Moscow’s backing of the project. Nevertheless, the recent positive developments are still inadequate factors for the project’s rapid implementation as demonstrated in the shelving or long delays in the implementation of many energy projects in the Caspian region such as those involving Iran and its neighbours. Developments in the next few months, including clear announcements on the availability of funds and a construction schedule, will certainly reveal whether the Caucasus will become a potential major route for Iran’s energy exports or the Iranian-Armenian gas pipeline will turn into a pipe dream.

AUTHOR’S BIO: Dr Hooman Peimani works as a Senior Research Fellow for the Centre for International Cooperation and Security (CICS), University of Bradford, UK.