In a setup indicative of the changing economic and, possibly, geopolitical dynamics in the South Caucasus, Armenia hopes China soon will agree to pay for a planned railway to Iran. At the same time, it also is lobbying for a free-trade agreement between Iran and the Russian-led Eurasian Economic Union.
Economically and otherwise dependent on the big brother to the north, Russia, and sandwiched between hostile Azerbaijan and Turkey to the east and west, Armenia hopes that things can go south, to Iran. The planned railway could give Iran access to the Black Sea for large-scale shipments of exports and landlocked Armenia a significant role as a transit country.
The state of the railway link is not clear yet. Iranian officials said they are building their portion of it, while Armenia is looking for the means to construct its own. Armenian Prime Minister Hovik Abrahamian hopes to scare up investment for the railroad from China during his upcoming September 23-25 visit. Yerevan and Beijing have already been in touch about the railway, according to Abrahamian.
As China is increasing its presence in the Caucasus, Iran may follow suit. The compromise on Iran's nuclear program (still awaiting an all-clear in the US Senate) has encouraged Tehran to explore trade opportunities in its neighborhood. Tehran already expressed an interest to get onboard with the energy export corridor that for now begins in Azerbaijan and goes to Europe.
Russia in the past was believed to want to hem in Iranian economic clout in the Caucasus; mainly in Armenia. But with a growing partnership with Tehran on the Syrian crisis and a desire to increase the influence of the Eurasian Economic Union, of which Armenia is a member, the Kremlin no doubt senses an opportunity. Along with fellow EEU members Belarus and Kazakhstan, Moscow is reviewing the motion for a free-trade agreement with Iran.
These movements may put more pressure on Georgia to allow a northeast railway transit through its territory. Such a route would go through breakaway Abkhazia, where Russian troops have been busy restoring Soviet-era tracks. Faced with domestic pressure not to compromise on the railway with Russian troops stationed in Abkhazia, Tbilisi insists that restoration of the Russia-Georgia-Armenia link is not possible for now.