Restoring railway to Turkey should take into account safety and economic benefits: Ministry of Finance
YEREVAN, June 26. /ARКА/. Armenia thinks that the restoration of railway infrastructure in the direction of Turkey should be assessed from the perspective of transit, security, and the overall economic impact for Armenia, stated Deputy Finance Minister Avag Avanesyan.
Responding to a question about why Russia's participation in the railway restoration was initially discussed, while the possibility of implementing the project by Armenia is now being discussed, Avanesyan noted that negotiations are ongoing.
"One side can first declare interest, and then financial and economic calculations are carried out," he told journalists on the sidelines of a business forum dedicated to the 20th anniversary of the Eurasian Development Bank.
The economic impact is more important than the specific partner
According to the deputy minister, in such projects, it's important to consider not only the direct financial return for the private investor or partner, but also the broader impact for the state.
"Our benefit from any infrastructure is transit, security, and increased economic capacity. Thanks to transit, we can raise additional funds. Unblocking communications increases our economic interest," he stated.
According to him, unblocking international communications could bring Armenia "very significant economic benefits."
On state investments
Avanesyan noted that some infrastructure projects may be beneficial for the country, but not attractive enough for private investors.
"There are projects where a private investor clearly sees that they are making this investment and receiving a financial benefit. But there are also programs that, for example, are very beneficial for Armenia, but the private investor cannot derive sufficient financial benefit from them," he said.
He added that in such cases, the state may decide to implement the project itself.
"When it comes to such projects, the state can decide, 'Okay, I'll do it myself.' Because for a private investor or the relevant partner, from a purely financial standpoint, the project may not be as attractive or may be more expensive than they thought," Avanesyan noted.
The deputy minister also pointed to the concept of positive externalities, where the state and society benefit from a project, but the private investor can't always monetize them.
"These positive externalities accrue to the state and society, but the private investor can't always monetize them," Avanesyan said.
He explained that in such cases, the state can invest in infrastructure itself, since the benefits ultimately accrue to citizens, as well as to the budget through increased tax revenues.
"Our citizens benefit, who will then live better and healthier lives; we will collect more taxes, and as a result, the debt we used to build the infrastructure will be repaid," he said.
Possible Participation of South Caucasus Railway
Commenting on Russian Deputy Prime Minister Alexey Overchuk's statement that without Russian freight, Armenian railways (managed by South Caucasus Railway - ed.) risk becoming unprofitable and will serve exclusively the country's domestic needs, Avanesyan noted that each participant in the process is guided by their own interests.
"A private Russian company looks at its own interests—that's normal. They look at their own interests, and we look at ours. And it's possible that something will be unprofitable for a private company," he said.
Responding to a question about the possible participation of South Caucasus Railway, Avanesyan said that various discussions are ongoing.
"Our message is this: this is important to us. If South Caucasus Railway makes the calculations and says: 'I'm interested, I want to invest,' then great." "If the fee they decide to set is so high that our externalities are reduced to zero, then why should we do it?" he said.
Protecting Armenia's interests is key
According to the Deputy Minister, the negotiations center on the question of what benefits Armenia will receive and what portion will go to the private investor.
"A balance is needed here. Depending on this, the balance may be with one partner or another," he noted.
Avanesyan emphasized that Armenia does not view cooperation with any one partner as an end in itself.
"We will never come and declare that working with this one partner is a complete victory. No, that cannot be. Victory means infrastructure that is cost-effective for the Republic of Armenia. Whoever wants to build it, let them build it. The main thing is that this infrastructure exists, and most importantly, that our interests are protected. Who exactly will do this is a technical matter," the Deputy Minister of Finance stated.
Route Competition
Speaking about the construction of the Baku-Nakhichevan railway and possible route competition, Avanesyan noted that businesses will choose the fastest and most profitable route.
"In the economy, business works like water. It will go wherever it's fastest and most profitable," he said.
According to him, Armenia will evaluate which route is truly most effective for business, and this applies not only to the Iranian route.
"There are Azerbaijan, Turkey, gas pipelines, European trade, trade with Iran, many players, trade from Asia, Central Asia—many players for whom this infrastructure bottleneck could be opened, and it could prove much more profitable," Avanesyan stated.
The cost of the project has not yet been announced.
Avanesyan noted that eliminating infrastructure bottlenecks will allow several important economic centers to be connected.
"The center of economic power is gradually shifting toward the East. If you look, for example, at the role of Central Asia, it is beginning to grow. "If we look at China, Iran... But the topic of Central Asia is particularly interesting," the deputy minister said.
However, he did not specify the specific cost of the project to restore rail service to Turkey, nor the potential Armenian costs under the TRIPP project, noting that calculations are still being made.
ARKA News Agency is the business forum's media partner.
