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Russian Railways can early terminate the agreement on the management of railways of Armenia, which is carried out by its subsidiary South Caucasus Railway (SCR), said Deputy Minister of Transport of Russia Vladimir Tokarev. 

“Armenia has created a situation in which SCR cannot work normally: all documents have been seized for ten years, unproven charges have been brought and no guarantees have been given,” he told RTVI. “Our arguments that the checks did not reveal any violations earlier, and the arguments the fulfillment of concession conditions is ignored. ”

The Ministry of Transport explained to Kommersant that all options are being worked out, including the one mentioned by the deputy minister. Russian Railways declined to comment, suggesting that they rely on the position of the Ministry of Transport.

In August 2018, the State Revenue Committee of Armenia conducted searches in the SCR office with the involvement of special forces on suspicion of tax evasion of $ 19 thousand. On the same day, the meeting of SCR Director General Sergey Valko with the Prime Minister of Armenia Nikol Pashinyan and a telephone conversation the next day Pashinyan with Vladimir Putin, during which "some relevant topics on the bilateral agenda" were discussed. The sides of Kommersant linked this with searches in the South Caucasus Railway. At the same time, in an interview with Kommersant on the basis of his September talks with Vladimir Putin, Pashinyan said that he had discussed the SCR issue, and that, according to preliminary information, the company's abuses were not $ 19 thousand, but $ 60 million.

On December 25, 2018, the Armenian Investigative Committee reported that the subject of the investigation is the ten-year activity of SCR, the effectiveness and appropriateness of investments in the amount of about AMD 110 billion ($ 230 million) is being checked.

On September 16, Nikol Pashinyan stated that SCR inspections were carried out in order to protect the interests of Armenia, and active talks were ongoing with the Russian authorities on this issue.

The SCR does not comment on the information on the possible early termination of the concession deal and continues to engage in economic activity, the company told Kommersant. In turn, the Ministry of Territorial Administration and Infrastructure of Armenia told Kommersant that “talks on fulfilling the obligations stipulated by the concession agreement are still in process”.

“If a business is opened, it should end sometime,” says Andrey Babko, the trade representative of Russia in Armenia. “And when this story has been going on for more than a year and no one has been showing anything, but only hindering the company from working, then what’s the solution for company? Therefore, of course, they use it, perhaps it’s like a tool, they show: guys, if you don’t finish this business, we will leave. ” According to the trade representative, he has no feeling that the actions of the Armenian authorities against the SCR are directed against Russia. He added that investors should be treated more carefully: “I'm sorry, but soon all investors will run away if they treat them like that.”

Indeed, there are accumulated problems in relations between Russian Railways and the Armenian authorities, and there are primarily flaws in the Ministry of Transport and the Russian Foreign Ministry, says Infoline Analytics CEO, Mikhail Burmistrov, because the amount of support that Russian Railways receives in this matter is inadequate to the amount of available problems, nor the political assistance requested by Armenia from Russia. According to Burmistrov, the issue is in a critical stage, and the fact that Russian Railways is forced to raise the question of leaving the country is the last call for help.

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