By Samvel Avagyan

Can sanctions against Iran affect Armenian-Iranian economic ties? Numerous sanctions were applied against Iran before, which, however, did not affect the bilateral economic ties.

The only exception was the IT sector: the European Union (EU) forced Armenia to restrict the export of dual-purpose products for Armenian hi-tech products not to be found in Iran. Also, Armenia must not become a country for transit of hi-tech products to Iran. To specify, we would like to inform the reader that the “restriction” applies even to personal computers. The restrictions hindered the development of Armenia’s IT sector, but the external pressure outweighed the country’s capability to defend its interests.

However, Armenia and Iran found new fields of cooperation – first of all, the energy sector. An Iran-Armenia gas main was constructed, and a number of large-scale projects are being implemented or elaborated. Among them are an HPP construction project in Meghri, an oil-products pipeline, a high-voltage transmission line and an Armenia-Iran railway.

The EU’s unprecedented sanctions are to take effect on October 27. They are aimed at the Iranian energy sector. Specifically, the import of oil-and-gas production technologies to Iran will be banned. Iran’s oil-and-gas- production sector needs modernizing. Since the EU issues no warning to Iran’s allies, the Armenian-Iranian energy cooperation will hopefully not be affected. Moreover, Iran is increasingly interested in developing energy integration with Armenia. The question is whether Iran will sponsor the programs, as Armenia is unable to.

The sanctions will also be applied against the Iranian financial sector. As far back as June 9, the U.S. Security Council sanctions called on all the nations to be careful about all the money transfers effected by means of Iranian banks. The U.N. also called on it member-states to prevent the opening of Iranian bank branches The Mellat bank is operating in Armenia, which is effecting transactions with official capital. The bank’s assets total 16.2bn AMD (about U.S. $45m). Of course, this is not a scale posing a threat to the nuclear security of the U.S. and Europe. The bank’s main task is to serve Iranian businessmen’s accounts in Armenia.

It should be remembered that 30% of the 3,700 companies founded in Armenia are Armenian-Iranian joint ventures though some of them are not actually operating. The aim of the EU financial sanctions is not prohibiting, but establishing strict control over Iranian companies’ financial transactions in European banks. Specifically, a transfer exceeding €10,000 is to be accompanied by an explanatory note. A transfer exceeding €40,000 requires official permission. The restriction, of course, applies to the Mellat bank as well. We are not well informed of the bank’s cooperation with European banks. However, it will not affect the Armenian banking system.

Therefore, in principle, the U.N. and EU sanctions will not have any serious impact on the Armenian economy.