Armenian Media: Plans for New Russian Investments Raise Hopes and Spark Skepticism

Several weeks after the announcement of ambitious plans for stepped-up Russian investment in the Armenian economy, Armenian media outlets and political analysts are still searching for details on the envisioned projects. Speculation is centering on a plan to build a refinery in Armenia that would process Iranian oil.

News of the investment plans first surfaced at an informal meeting on January 24 between Russian President Vladimir Putin and Armenian President Robert Kocharian at the Russian Black Sea resort town of Sochi. Putin announced during the meeting that Russian companies were ready to invest some $800 million over the next two years, an amount equal to all Russian investment in Armenia for the past decade.

"Too bright to be feasible," commented the Russian-language Golos Armenii (Voice of Armenia) newspaper on February 1, summarizing the general mood of most reporters and onlookers following the Sochi summit. The bulk of information about this flood of investment came two days later, via an article published in the Russian daily Kommersant, a publication known to have well-placed Kremlin sources.

A plan to construct an oil refinery near the southern Armenian town of Meghri that would process oil exported from Iran and then sell it back is potentially the most controversial of the projects. Kommersant argued that, though the project would be far from commercially viable, Moscow is determined to implement it for "political" reasons, including the need to establish back-up oil refineries in case refineries in Iran are destroyed in potential US military strikes.

On February 5, the Arminfo news agency quoted Armenian Energy Minister Armen Movsisian as saying that he expected to visit Tehran "in the near future" to discuss the Meghri project, and that feasibility studies for the project are underway in Armenia. In a January 29 press conference, Armenian Presidential Press Secretary Viktor Soghomonian held a briefing to correct and comment on the information published earlier by the Russian newspaper.

Soghomonian confirmed the existence of the refinery project, and that Armenia will partner with Russia and Iran in the venture. Work, however, remains in the early stages, he said. Soghomonian termed "inflated" Kommersant estimates that the refinery would cost $1.7 billion to build, plus require another $1 billion for a pipeline and railroad to connect Meghri with the Iranian city of Tabriz.

Russian companies have also expressed interest in atomic energy development in Armenia, according to the newspaper. On February 6, Movsisian told the National Assembly that since Armenia is one of the few countries in the world with excess uranium reserves, the interest of Russia, which does not possess such stores, is "quite natural," the newspaper Hayastanu Hanrapetutiun reported. Soghomonian, however, rushed to assure reporters that this interest does not mean that Armenia will start uranium enrichment. Both countries, he said, share an interest in starting uranium extraction in Armenia to produce nuclear fuel for Armenia's nuclear power plant.

Russian companies already in Armenia -- telecommunications company VympelCom, energy giant Gazprom, and Russian Railroads -- were reportedly also geared to make large investments in the Caucasus nation, but information about these, or other investment plans remains sketchy. Not surprisingly, local specialists are reluctant to comment on the trend, while media analyses are dotted with references to unnamed "sources" and "experts."

"It is evident that a complex bargain took place in Sochi, concerning, among other things, future internal developments in Armenia, a former highly-ranked government official, who did not want his name to be disclosed, told EurasiaNet. "But it is impossible even to speculate about the details."

Opposition-oriented media are inclined to treat these plans as mere propaganda. In an article entitled "Another Fairy Tale," the newspaper Haykakan Zhamanak wrote on January 31 that shocking projects like the refinery for Iranian oil are simply used to bolster support for the current Armenian leadership on the eve of the May 12 parliamentary elections. The refinery project was first raised in 2002 by Mikhail Kasyanov, the Russian prime minister at the time. Coincidentally, Kasyanov's comments on refinery possibilities came during the run-up to general elections in Armenia, the newspaper noted. Chorrord Ishkhanutiun, a newspaper close to the opposition Armenian National Movement of former President Levon Ter-Petrossian, wrote in its January 30 issue that the Russian promises are just another enticement for Armenia to reject any compromise over the disputed territory of Nagorno-Karbakh, and to remain a Russian "outpost," isolated from all of its neighbors. [For background see the Eurasia Insight archive].

While certainly cautious, some opposition newspaper commentaries contained elements of optimism. For example, in its February 6 issue, Iravunk, also an opposition newspaper, argued that a long-term goal of the Meghri project may be to stimulate construction of a north-south transportation corridor to counter those running from east to west (such as the Kars-Akhalkalaki-Tbilisi-Baku railway), which will operate beyond Moscow's control. [For background see the Eurasia Insight archive]. The newspaper quotes the Oleg Maksimov, an analyst at the Russian investment firm Troika Dialogue, as saying it is "too early" to see a political motive behind the Meghri refinery since "[t]here is a shortage of oil refining capacities worldwide, and they [may] all eventually become profitable."

For its part, Golos Armenii, in its February 1 commentary, implies that holding a democratic vote on May 12 may prove the surest way to overcome any outside objections and make the Meghri project a reality. "If a fully democratic procedure is performed in Armenia, it would ensure not only fulfillment of the [American]