RAILROAD ISOLATION AN URGENT GOAM CONCERN

C O N F I D E N T I A L YEREVAN 001531 SIPDIS DEPARTMENT FOR EUR (DAS BRYZA) AND EUR/SNEC (AMB. MANN) E.O. 12958: DECL: 08/23/2015 TAGS: PREL ECON ETRD TU GA AM AJ SUBJECT: RAILROAD ISOLATION AN URGENT GOAM CONCERN REF: A. BAKU 1226 ¶B. YEREVAN 1494 ¶C. 04 YEREVAN 2656 Classified By: Amb. John M. Evans for reasons 1.4 (b, d). Summary -------------- ¶1. (C) Top Armenian government officials continue to voice their deep concern about plans to build a railroad which would further isolate Armenia and exclude it from the process of regional economic integration. This concern has been echoed by the Armenian-American community and has found resonance with several Members of Congress. We understand that Washington is considering how best to respond to Azerbaijan's request that the U.S. support this project (ref A). While the GOAM's expressed concerns are -- for them -- important arguments against the rail by-pass, we believe that this project would work against USG interests for a more strategic reason: building this new line would remove an important economic incentive for the states of the region to resolve the N-K conflict. End Summary. ¶2. (C) FM Oskanian continues to raise Armenia's concern about the proposed rail link from Turkey directly to Georgia. Oskanian met with U.S. Democratic National Committee Chairman Howard Dean on August 26 and focused on the proposed rail line linking Azerbaijan to Turkey through Georgia as his top concern. According to Dean and visiting Los Angeles City Councilman Eric Garcetti (who met with Oskanian separately), Oskanian said the re-activation of its Gyumri-Kars railroad was key to the on-going talks between Armenia and Turkey. Oskanian reportedly said that international financing of the proposed rail link going around Armenia (ref B) would send the wrong message regarding regional integration and would remove a key incentive for establishing commercial links between Armenia and Turkey and Azerbaijan. ¶3. (C) Oskanian's concern about the proposed rail link does not come as a surprise. GOAM officials are raising the topic with increased frequency with us and say it would only exacerbate the economic pressure and displacement of the blockade. During his August 16 meeting with Ambassador Evans, Deputy Foreign Minister Kirakossian also raised the issue, noting that the GOAM viewed it as another example of Armenia's isolation in the region (ref C). ¶4. (C) In a January 13, 2005 INR report, analysts stated that "Baku's evident willingness to provide cash to support this project revives prospects for the new railroad and threatens to nullify a big bargaining chip that Armenia has used to try to lure Turkey away from its alliance with Azerbaijan. Even more ominously for Yerevan, opening up this new route would cause lasting economic damage to Armenia, because it not only would bypass Armenia but also would open an alternative rail route between Turkey and Russia." As we reported in December (ref C),the Armenian authorities seem to be bending over backward to make the re-opening of the existing rail route attractive, including indicating a readiness to forego transit fees on rail cargoes. ¶5. (C) Our primary concerns are focused more on the economic incentive for the states of the region to remove this disruption to normal transport routes. We believe that even a partial lifting of the rail blockade would produce results which could demonstrate the economic value of resolving this long-standing conflict. EVANS