Concession Politics

Armenia’s leader has finally entered into face-to-face talks with Russian Railways on the substance of the matter. And the substance, as it turns out, is very simple. There are no legal claims against Russian Railways regarding its performance under the concession agreement. Russian Railways is ready to account for every ruble it has invested in the development of Armenia’s railways. There is, however, one catch: politics. And politics is undermining the technological unity of the 1,520 mm gauge space. Integration always prevails over disintegration, but in the short term the effects can be misread, and tactical victories can obscure strategic—sometimes fatal—losses and mistakes.

The soft tone of the talks held in Armenia only underscores how complex the situation is. The Armenian government will keep searching to the very end for a solution under which Russian Railways loses the concession. The situation is made worse by international demand for Armenia’s transit potential. The stabilization of relations between Azerbaijan and Armenia has drawn the attention of the leading powers to the South Caucasus as a potential transit region.

Since sanctions were imposed on Russia, competition for alternative transit routes that bypass Russia has increased dramatically. Freight flows from China to Europe and back are now spread across different routes, including even the Northern Sea Route, and some players, the United States among them, are keen to gain control over these flows—and to profit from them as well.

A difficult round of negotiations lies ahead—it may be quick or it may be long, but it will be decisive for the technological space of the 1,520 mm gauge.

And it is worth remembering that a soft tone, smiles and working groups are not a result. They are a path toward one, and each side has its own idea of what that result should be.




Pavel Ivankin, President of the National Research Center for Transportation and Infrastructure