IRAN AND ARMENIA PURSUE STRONGER TRADE TIES, WHILE

C O N F I D E N T I A L SECTION 01 OF 03 BAKU 001309

SIPDIS

SIPDIS

TREASURY FOR KRISTEN HECHT AND COLLEEN EDDY

E.O. 12958: DECL: 10/21/2017
TAGS: ECON PBTS PGOV PHUM PREL KIRF IR AJ AM
SUBJECT: IRAN AND ARMENIA PURSUE STRONGER TRADE TIES, WHILE
SUSPICIONS LINGER OVER IRAN'S REGIONAL AMBITIONS

REF: BAKU 766

BAKU 00001309 001.2 OF 003


Classified By: DCM Donald Lu for reasons 1.4 (b) and (d).


1. (U) This message has been cleared by Embassy Yerevan.


2. (C) Summary: During an October 1-5 visit to Armenia,
Baku-based Iran Watcher met with foreign policy analysts,
religious leaders, academics, and bankers to further explore
Iranian-Armenian relations. Armenian analysts believe Iran's
nuclear ambitions are unstoppable, with Iran increasingly
convinced that U.S. forces are spread too thin to pose a
serious military threat to Iran. Armenian commentators
argued that Iran benefits from the regional status quo and
particularly the unresolved Nagorno-Karabakh conflict.


3. (C) Summary continued: Iran and Armenia enjoy close
cultural, trade, and economic ties. Bishop Paren Avedikyan
estimated that only 100,000 to 150,000 Armenians remain in
Iran, adding that many of these Armenians continue to seek
guidance from Armenia even though they fall under a
Lebanon-based Catholicos. The Armenian National Library
pursues ties with Iran, having signed memoranda of
understanding (MOUs) with the Iranian National Library and
Archives. According to HSBC Bank Chief Executive Officer
Anthony Turner, Iran's Bank Mellat is active in Armenia,
providing trade and commerce-related services primarily to
Iranian customers, although HSBC is terminating its
relationship with Bank Mellat. Travel to the northern
ports-of-entry revealed light Iranian vehicle traffic. End
Summary.

Armenian Foreign Policy Analysts on Iran's Nuclear Program
-------------- --------------


4. (C) A range of foreign policy analysts and academics
argued that there was little the U.S. could do to stop Iran
from developing a nuclear weapon. According to Dr. David
Shahnazaryan, Head of the Concorde Centre for Political and
Legal Studies head and former Armenian Minister of National
Security (Shahnazaryan is also a co-founding member of the
Armenian National Movement party),the Iranian leadership is
intent upon developing a nuclear weapons program and there is
seemingly little the U.S. can do to stop this. Saying that
Iran's economy is not sufficiently weak enough to force the
Tehran regime to change its foreign policy direction,
Shahnazaryan posited that the U.S. needed a strategic policy
- not a tactical policy - to deal with Iran. According to
Shahnazaryan, a military attack on Iran by the U.S. "was not
wise" because while the U.S. would be militarily successful,
"enormous political problems would follow." As direct talks
between the U.S. and Iran seem unlikely, Shahnazaryan
suggested that the U.S. consider employing a mediator with
which to engage Iran. Pointing to French President Sarkozy's
strong speech at the UN, Shahnazaryan suggested that Sarkozy
would be an "effective" interlocutor, effective both in
negotiations with Iran and in winning over EU public opinion
on Iran.


5. (C) Concerning the Armenia-Iran relationship and Iranian
interests in the Caucasus, Shahnazaryan said that he did not
like Armenia's political and security relations with Iran.
Shahnazaryan believes that Iran benefits from the status quo
in all Caucasus conflicts, and particularly the
Nagorno-Karabakh. According to Shahnazaryan, Iran is
interested in keeping Azerbaijan focused on the unresolved
Nagorno-Karabakh conflict because of Iran's insecurities
about the ethnic Azeri issue in northwestern Iran.
Reiterating his concern that relations between Armenia and
Iran are not limited to the economic/commercial sphere,
Shahnazaryan suggested that both countries enjoyed "high
security and political relations." With regard to other
regional actors, Shahnazaryan said that regional conflicts
and Iran's confrontation with the West were in Russia's
interest as well because they contributed to higher commodity
prices and a "desire to frustrate U.S. foreign policy
efforts." Shahnazaryan suggested that Turkey was driven by a
goal to become an energy and pipeline hub for Europe, and
that would affect Turkish foreign policy. Noting that the
possibility of an Iran/Russia/Turkey "energy axis" was being
actively debated in Armenian foreign policy circles,
Shahnazaryan suggested that this would be a danger for
regional development. (Comment: Shahnazaryan's anti-regime
biases may color his analysis, and indeed his presentation
may be intended in part to pre-dispose U.S. policy toward the
opposition. He strongly implies that the opposition Armenian
National Movement would be considerably more pro-American
than the current Armenian government, particularly in its
relations with Iran and Russia. End Comment)

Insights Into Iran From the Holy See at Echmiadzin
-------------- --------------


6. (C) Bishop Paren Avedikyan explained that although
Armenians in Iran fall under the Holy See of Cilicia in
Antilyas (Lebanon),not Echmiadzin, Armenians in Iran still
look toward Echmiadzin for guidance because the Catholicos of
All Armenians (in Echmiadzin) claims seniority over the
Catholicos of Cilicia. (Note: The Armenian Church has been
divided into the rival Echmiadzin and Cilician Catholicosates
since the fifteenth century, though in modern times relations
between the two have been relatively benign. End Note). As
such, many Iranian Armenians pay their respects to Echmiadzin
- the fourth century birthplace of the Armenian Church - when
visiting Armenia. The Echmiadzin Catholicosate thereby gains
regular insights into the life of the Armenian community in
Iran. According to Avedikyan fewer than 100,000 to 150,000
Armenians remain in Iran, less than half of official Armenian
and Iranian government estimates (reftel). Avedikyan
reported that Armenians in Iran leave primarily for two
reasons: economic and legal, with most fleeing Iran's
deteriorating economic situation and seeking better
opportunities elsewhere. Legal issues affecting members of
all of Iran's officially-recognized religious minority
communities (Armenians, Jews, and Zoroastrian) also are a
problem, according the Avedikyan explaining as example the
legal stipulation that should a member of any religious
minority convert to Islam, then the entire family's
inheritance becomes the legal property of the new convert to
Islam.


7. (C) Within Iran, Avedikyan reports that the Armenian
church has three dioceses centered around Esfahan and Tehran,
and is led by a Tehran-based Archbishop. Characterizing
relations with the Armenian Church in Iran as "amicable,"
Avedikyan claims that reattachment to the Mother See of
Echmiadzin is an interest of many Armenians in Iran.
Suggesting that the Iranian regime is not ignorant of this
split, Avedikyan speculated that "Antilyas is probably
cooperating with the Iranian government" and that Iran is
probably "using it for its own purposes" (e.g., Iran wants to
showcase its treatment of its religious minorities for public
relations purposes).

Expanding Cultural Ties with Iran
--------------


8. (C) Providing an overview of Armenia's long-standing
cultural ties and relations with Iran (the first
Armenian-language printing press was reportedly located in
Esfahan),Armenian National Library Head Davit Sargisyan said
that his library had signed memoranda of understanding (MOUs)
with the Shiraz Regional Library for Science and Technology
and the Iranian National Library and Archives. Saying that
the Armenian side was motivated by a strong interest to
"locate Armenian objects in Iran due to many migrations,"
Sargisyan said that the Iranian side appeared motivated by a
desire to gain access to Persian scripts in Armenian
libraries. According to Sargisyan participants and hosts
bore the costs for these exchanges, with participants paying
for transportation expenses and hosts providing
accommodation. Sargisyan said that the MOUs also envisaged
full access to archives and databases, the details of this
arrangement still to be worked out.


9. (C) Speaking about his most recent visit to Iran in the
summer of 2007, Sargisyan said that April 24 "genocide"
remembrance protests in Iran had been banned, something that
had been allowed back to Khomeini's time. That said,
Sargisyan said that Armenian art and culture are on exhibit
in a variety of museums, that Armenian-language papers and
books are still published, and that there are 13 active
Armenian churches in Esfahan alone. He said that many
Armenians were emigrating to the U.S., Europe, and Australia,
primarily for economic reasons. In Tehran, Sargisyan said
that the Ararat Community Center enables members of the
Armenian community to meet without the usual outside
restrictions, with men and women allowed to meet, smoke, and
no covering of women's hair. Sargisyan said that he admired
the great amount of attention Iran pays to historical and
cultural matters, making considerable investments in its new
national library and Iranian Studies center.

A Banker's View
--------------


10. (C) According to HSBC Bank Chief Executive Officer
Anthony Turner, Iran's Bank Mellat is active in Armenia,
providing trade and commerce-related services primarily to
Iranian customers. Characterizing Bank Mellat's Yerevan
footprint as "small," Turner said that it was "respectable"
and run by a "professional manager." Turner told Iran
Watcher he had received instructions from London to cease all
business relationships with Bank Mellat, and that he would be
closing Bank Mellat's account with HSBC shortly. Concerning
the Armenian Central Bank, Turner characterized it as
"well-developed," operating with "sound regulations." He
said that the Financial Intelligence Unit (FIU) was
established within the Central Bank by Armenian legislation.
Turner said that the Central Bank took its Anti-Money
Laundering (AML) and Counter-terrorism Financing (CFT)
obligations "seriously," with suspicious activity reports
(SARS) having criteria-driven requirements such as mandatory
reporting for all transactions in excess of 20 million Dram
(approximately USD 55,000). Concerning other foreign banks
active in Armenia, Turner said that Russian and French banks
were also major players, with Gazprom planning to establish
an Armenian subsidiary bank, something Turner said was most
likely associated with Gazprom's interest in building an oil
refinery at Meghri.

Survey of POEs with EXBS
--------------


11. (C) Traveling to Armenia's northern ports-of-entry
(POEs) on the Georgian border at Bagratashen (land and rail),
Bavra (land),and Gogovan (land),Iran Watcher and Embassy
Yerevan's EXBS Advisor observed portal monitors in operation
at all ports. Speaking with customs and border guard
officials at each POE, Iran Watcher learned that Iranian
vehicle traffic at Bavra and Gogovan was very limited,
primarily privately-owned vehicle traffic in the summer
months (reportedly Iranian Armenians going to Georgian Black
Sea resorts for vacation). At the principle northern POE of
Bagratashen, Iran Watcher observed light Iranian truck
traffic, associated primarily with commercial goods such as
plastics bound for Georgia. It appeared that some
Iranian-plated trucks displayed the decal of a Yerevan-based
shipping company. Enroute to the Gogovan POE, Iran Watcher
also observed the Iranian-financed windmill farm at Pushkin
Pass (approximately 25-30 kilometers north of Vanadzor),
where at least four windmills were visible from the road.
According to EXBS Advisor, the air POEs of Zvartnots and
Gyumri will be outfitted with portal monitors in 2008, with
EXBS outfitting the Zvartnots POE with monitors and the
European Union outfitting the Gyumri POE.

Comment
--------------


12. (C) The Government of Azerbaijan (GOAJ) has repeatedly
claimed that weapons of mass destruction (WMD) are smuggled
into the Republic of Armenia (and beyond) across Iran's
border with Armenian-controlled Azerbaijani territory. While
it is possible that WMDs are being smuggled across this
border, it does not seem likely that these cargoes could then
exit the Republic of Armenia without notice because all of
Armenia's land and rail POEs are outfitted with portal
monitors.
DERSE