The Armenian authorities are getting ready to sell the Armenian railway to the Russians among other things. There is no longer any doubt that the Russians are going to be the future owners of the railway, whether they are buyers, guarantee, etc. Let’s recall that the Minister of Transportation and Communication of Armenia Andranik Manukyan and the director of the “Armenian Railway” company Ararat Khrimyan had hinted about this a couple of times.
When hinting about it, they have mentioned that they this was what they wanted. But everyone knows that these kinds of wishes are not made based on personal sympathy. Usually, these kinds of announcements are aimed towards getting the people ready for some trade-off or a transaction. Experience has shown that after a while, those announcements correspond to reality. The hand-over of the Armenian railway to the Russians will soon become a reality. What does the Armenian railway stand for to make Russia want to buy it? The Armenian railway has been around for more than 100 years and it has been the railway of independent Armenia for the past 15 years. Armenian trains haven’t passed Georgia since 1992. Out of the four border exits, currently only the Ayrum station leading to Georgia is open. For well-known reasons, the Akhuryan, Ijevan and Yeraskh passing points of Turkey, Azerbaijan and Nakhijevan are currently closed. Turkey’s border hasn’t really been functioning even during the years of the Soviet Union. After Georgia, Armenia’s trains don’t have another path to take besides Georgia because the Abkhazian railway is closed. The fleet of the Armenian railway hasn’t been remodeled in the past 20 years. According to director of “Armenian railways” Ararat Khrimyan, the fleet has a 22-32 year guarantee, which is approaching the deadline. According to the rules and regulations of railway systems of the CIS countries, the fleet that has expired is not allowed to cross the border of the given country. This is the reason why the Armenian authorities have decided to privatize this system too.
“First of all, we’re not selling the railway. We have to give it for credential management. Twenty five years is not that long and Armenia can do whatever it wants with the railway after that. The new manager has to invest 178 million dollars in 15 years. This amount was determined by the Armenian experts and the experts at the World Bank. In fact, 10 million dollars has to be invested immediately.”
The Armenian railway has nearly 100 kilometers primary and nearly 250 kilometers of secondary lines. There are approximately 3000 wagons of which only 1200 are used for transporting cargo, while the rest are in the process of remodeling and substitute the old ones. The 20-30 year old wagons are remodeled periodically in our depots, but we don’t have the corresponding factories for complete remodeling. There are factories like that in Russia, Ukraine; recently a factory was constructed in Georgia. According to Khrimyan, the complete remodeling of the wagons will increase the number of years before the railway will be ready by 11 years. But in that case, 14-15,000 dollars will be needed to remodel one wagon. A new wagon costs 2-2.5 times more and 200-250,000 dollars is necessary for the capital remodeling of one kilometer of the railway along with the higher substructures. According to the company director, “Armenian Railway” doesn’t have that opportunity and that’s why the government has decided to privatize the system. The only updating of the railway was done during the past 2-3 years with the 15,000 dolllar loan provided by the World Bank. Seventy kilometers have been remodeled and that’s only 10% of what’s required. During the past couple of years, the company has actually received some profit. According to Khrimyan, the company received 300-500,000,000 dollars during the past 2-3 years. This year the amount of cargo transported wll reach the 3,000,000 tons mark and the profit will remain the same. But that’s not enough money to restore the system completely. In 2006, the Armenian railway will transfer 3 million tons of cargo, while it was 10 times more back in the days of the Soviet Union, in other words, profit was ten times more. The significance of the railway, especially the Armenian railway, is to provide transit roads and that’s where the money is going to flow from. Working to take care of the needs of the country won’t help the system and there can’t be development or perspective. Minister of Transportation and Communication of Armenia Andranik Manukyan recently announced that by handing over the Armenian railway to private ownership, Armenia will have a big opportunity to develop it and that will be a counterbalance for the Baku-Tbilisi-Jeyhan oil pipeline. In this case, how can the Armenian railway become a counterbalance for the foreign investor with its possibilities (expired fleet, only one exit through Georgia and a very low profit, or not even an updated service and no open borders)? If the Armenian border was closed 15 years ago, what’s the guarantee that it won’t stay closed for another 15 years? Why should foreign companies be interested in making investments in these conditions?
“The borders aren’t going to be closed forever. Turkey has a prerequisite for entering the European Union and that is to open the border. Only then will the Armenian railway become transit,” says Khrimyan, who also underestimates the construction of the Kars-Akhalkalak railway.
Despite that, Turkey is not the only country, which Armenia has problems with. The Abkhazian railway leading to Russia is also closed. This is what makes the Armenian authorities justify the hand-over of the “Armenian railway” company to the Russians. The authorities can come up with the following: if the Russians take control of the railway, then they will be interested in opening the Abkhazian border as soon as possible, which will lead to the opening of the Turkish border. The 178 million dram investment is a pretty large amount for 15 years. Why are the Armenian authorities always trying to find foreign investors? If there are perspectives for development, then why don’t they look for the investor in Armenia, or restore the system with funding provided by the state during that time slot? After all, Armenia will get the profit and not the Russian or other manager? Mr. Khrimyan is not against having Armenians living in Armenia participate in the contest and win, but deep down inside he is in favor of the Russians. “It’s a contest; anyone can participate, but the Russians have a strong system and they can develop Armenia’s system too. The state doesn’t have such resources: Even if it had them, wouldn’t it be better for the state to invest that money in other fields?”
In any case, the Russian orientation is clear. Perhaps that’s not an orientation, but rather Russia’s pressure. The Russians are the ones with the desire of purchasing the railway. After all, they have taken control of almost all the strategic and significant resources of the energy and communication fields of Armenia. The recent one was “ArmenTel” and the next one is going to be the railway. This is Russian politics.