As the United States, the European Union, and western allies expand efforts to squeeze Iran through crippling sanctions, Tehran is working to create loopholes to mitigate the impact. Often, the Iranians have used third countries for this purpose. From the United Arab Emirates (UAE) to Germany, Iran established networks of businesses and front companies designed to assist and finance the regime’s illicit procurement activities. But the UAE and Germany, alongside other erstwhile partners of Iran, have since joined the sanctions’ effort, pushing Iran out of their financial systems and scaling down on trade.
Accordingly, Iran has sought to expand its activities in countries where a combination of geostrategic and domestic factors make Iran’s presence acceptable to local authorities, while staying under the radar of Iran’s enemies. Armenia is fast becoming a new transit point for the Islamic Republic’s activities and one that may prove critical in the regime’s efforts to fend off sanctions as it marches toward a nuclear weapons program.
Armenia lends itself well to Iranian circumvention of sanctions: for instance, it ranks 129 of 183 countries surveyed by the 2011 Global Corruption Index. Yerevan’s extensive trade relations with Russia make it a convenient transit point for merchandise that can benefit from a lax approach to export controls by customs and border authorities.
Besides, Armenia is next door to Iran and due to the awkward combination of its geography and its history, it does not have much trade with its other neighbors.
Armenia shares borders with Azerbaijan, Georgia, and Turkey. The border with Turkey is closed, on account of Turkey’s unwillingness to recognize the Armenian genocide. The one with Azerbaijan border is closed because of the ongoing conflict with Armenia over disputed Nagorno-Karabakh. And the border with Georgia is difficult to traverse given the adverse geography and weather conditions. Moreover, since Georgia was invaded in 2008 by Russia, a key Armenian trade partner, there are political reasons for the Armenians and Georgians alike to seek alternative trade routes.
As the Yerevan-based think tank Civilitas Foundation put it in a recent report, “Armenia’s only reliable access to the world was through Iran.”
For Armenia, Iran’s presence is a boost to its small economy.
Emanuele Ottolenghi is a senior fellow at the Foundation for Defense of Democracies and author of The Pasdaran: Inside Iran’s Islamic Revolutionary Guards.
The above article was published in weeklystandard.com on April 16th, 2012 (1:13 p.m.).