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The National, UAE
Nov 24 2012
Iran may look north to skirt US sanctions
by Justin Vela
Nov 25, 2012
YEREVAN // As legislators in the United States debate new sanctions
for Iran, both the regime and ordinary Iranian citizens are looking to
their northern neighbours in the South Caucasus, the region between
Turkey and Russia, as a way to maintain links to the outside world.
Siyamak Bolandi, an Iranian businessman who has lived in Armenia's
capital city of Yerevan for the past 13 years and imports carpets from
Iran, said that even his business has been affected by the strength of
international sanctions on Iran.
"I also import goods from Turkey," he said. "If I was only working
with Iran my business would suffer by 50 per cent."
Yet, he said, life is far more difficult for his countrymen still
living in Iran, some of who he has seen try to bring their savings to
Armenia to avoid depreciation.
The sanctions in the works by the US have been described as targeting
everything from Iranian assets overseas to all foreign goods that the
country imports, building on the tough sanctions package against
Tehran's oil industry that was pushed through by the US earlier this
year. The sanctions have hit Iran's economy hard in recent months,
imposed over Iran's nuclear programme, which the West suspects is
aimed at weapons development. Iran denies the charge, saying its
programme is for peaceful purposes such as power generation and cancer
treatment.
Armenia, Iran's isolated northern neighbour, has enjoyed close
relations with Tehran for centuries. With two of its four borders
closed because of disputes with Turkey and Azerbaijan, landlocked
Armenia is reliant on Iran as an important trade route and, recently,
a partner for energy projects.
In the past few years, visiting Iranians have started buying
apartments and other property in Yerevan. Apartment prices remain
inflated in Tehran, while real estate in Georgia and Armenia is "cheap
by world standards", said Lawrence Scott Sheets, South Caucasus
project director for the International Crisis Group.
Shirak Torosian, vice president of the Yerevan branch of TeleTrade
Armenia, who is originally from Iran, said the investments began when
the value of the US dollar dropped a few years ago.
"They are still coming over with suitcases full of money," he said,
adding that these days most Iranians arriving in Armenia come to
gamble. "It's not just sanctions. There is more trust in Armenia. The
future is better."
Under the sanctions, companies from Europe, Asia and elsewhere selling
machinery and other products to Iran would have to stop or face being
cut off from the US market. Banks whose clients are making
transactions with Iran would face a similar penalty if they did not
break off relations. And Iranian assets in financial institutions
overseas would have to be frozen.
According to some analysts, Iranian activity in the South Caucasus is
probably too small to concern the international community.
"As long as these small countries in the South Caucasus engage Iran
only at a very limited scale no one is going to complain about that.
It happens to be pretty beneficial to those countries," says Mr
Sheets.
"It's not sanction busting. There is a degree of sanction
manipulation," said another diplomat. "The scale is the critical
factor. If it is small scale, fine. If it is large scale, the
international community would be really interested."
As pressure on Iran mounts, however, analysts say there is the
potential for the regime to attempt to use its close ties with the
region to carry out attacks against its enemies or increase its
"manipulation" of sanctions.
Though Tehran denies its involvement in the incident, an attempted
attack on a staff member of the Israeli embassy in Tbilisi, the
Georgian capital, in February, was blamed on the regime.
On November 8, officials from Iran and Armenia broke ground for the
long-planned US$330 million (Dh1.2 billion) Megrhi hydroelectric plant
along the Arax river between the two countries. The 130-megawatt plant
will be built by an Iranian company and Iran will use the electricity
generated by the plant for the next 15 years. Afterwards, ownership of
the plant will be transferred to Armenia.
Bilateral trade amounted to $323 million last year, about 6 per cent
of Armenia's external trade. There is also a security aspect to the
relationship, with Iran backing Armenia against its long-standing
nemesis Azerbaijan.
"Look at the juxtaposition: Azerbaijan's closest ties are with Israel
and the United States," said ICG's Mr Sheets. "Armenia's relations
with Iran are purely pragmatic."
The new sanctions on Iran will test Armenia's loyalties between its
old ally Iran and its new European orientation, said Richard
Giragosian, director of the Yerevan-based Regional Studies Centre
(RSC).
In August, Reuters reported that the Iranian regime was attempting to
expand banking relationships in Armenia as a "convenient' location
where it could skirt international sanctions. Armenian officials
strongly denied the report, although their adherence to international
banking sanctions against Iran has been questioned in the past by
western officials.
Yet, Mr Giragosian said, Iran looks at the South Caucasus as a region
where it could procure "critical elements" that sanctions have
restricted.
"Many [Iranian] Revolutionary Guard units have pursued over the past
several years setting up joint ventures with foreign partners - front
companies - designed to pursue technical spare parts for military use
and nuclear centrifuge development," he said.
Such front companies have been closed in recent years in Dubai and Kuala Lumpur.
"There is new concern that Armenia, Georgia, India, and maybe even
Turkey may become attractive for such a pursuit," said Mr Giragosian.
http://www.thenational.ae/news/world/middle-east/iran-may-look-north-to-skirt-us-sanctions
Nov 24 2012
Iran may look north to skirt US sanctions
by Justin Vela
Nov 25, 2012
YEREVAN // As legislators in the United States debate new sanctions
for Iran, both the regime and ordinary Iranian citizens are looking to
their northern neighbours in the South Caucasus, the region between
Turkey and Russia, as a way to maintain links to the outside world.
Siyamak Bolandi, an Iranian businessman who has lived in Armenia's
capital city of Yerevan for the past 13 years and imports carpets from
Iran, said that even his business has been affected by the strength of
international sanctions on Iran.
"I also import goods from Turkey," he said. "If I was only working
with Iran my business would suffer by 50 per cent."
Yet, he said, life is far more difficult for his countrymen still
living in Iran, some of who he has seen try to bring their savings to
Armenia to avoid depreciation.
The sanctions in the works by the US have been described as targeting
everything from Iranian assets overseas to all foreign goods that the
country imports, building on the tough sanctions package against
Tehran's oil industry that was pushed through by the US earlier this
year. The sanctions have hit Iran's economy hard in recent months,
imposed over Iran's nuclear programme, which the West suspects is
aimed at weapons development. Iran denies the charge, saying its
programme is for peaceful purposes such as power generation and cancer
treatment.
Armenia, Iran's isolated northern neighbour, has enjoyed close
relations with Tehran for centuries. With two of its four borders
closed because of disputes with Turkey and Azerbaijan, landlocked
Armenia is reliant on Iran as an important trade route and, recently,
a partner for energy projects.
In the past few years, visiting Iranians have started buying
apartments and other property in Yerevan. Apartment prices remain
inflated in Tehran, while real estate in Georgia and Armenia is "cheap
by world standards", said Lawrence Scott Sheets, South Caucasus
project director for the International Crisis Group.
Shirak Torosian, vice president of the Yerevan branch of TeleTrade
Armenia, who is originally from Iran, said the investments began when
the value of the US dollar dropped a few years ago.
"They are still coming over with suitcases full of money," he said,
adding that these days most Iranians arriving in Armenia come to
gamble. "It's not just sanctions. There is more trust in Armenia. The
future is better."
Under the sanctions, companies from Europe, Asia and elsewhere selling
machinery and other products to Iran would have to stop or face being
cut off from the US market. Banks whose clients are making
transactions with Iran would face a similar penalty if they did not
break off relations. And Iranian assets in financial institutions
overseas would have to be frozen.
According to some analysts, Iranian activity in the South Caucasus is
probably too small to concern the international community.
"As long as these small countries in the South Caucasus engage Iran
only at a very limited scale no one is going to complain about that.
It happens to be pretty beneficial to those countries," says Mr
Sheets.
"It's not sanction busting. There is a degree of sanction
manipulation," said another diplomat. "The scale is the critical
factor. If it is small scale, fine. If it is large scale, the
international community would be really interested."
As pressure on Iran mounts, however, analysts say there is the
potential for the regime to attempt to use its close ties with the
region to carry out attacks against its enemies or increase its
"manipulation" of sanctions.
Though Tehran denies its involvement in the incident, an attempted
attack on a staff member of the Israeli embassy in Tbilisi, the
Georgian capital, in February, was blamed on the regime.
On November 8, officials from Iran and Armenia broke ground for the
long-planned US$330 million (Dh1.2 billion) Megrhi hydroelectric plant
along the Arax river between the two countries. The 130-megawatt plant
will be built by an Iranian company and Iran will use the electricity
generated by the plant for the next 15 years. Afterwards, ownership of
the plant will be transferred to Armenia.
Bilateral trade amounted to $323 million last year, about 6 per cent
of Armenia's external trade. There is also a security aspect to the
relationship, with Iran backing Armenia against its long-standing
nemesis Azerbaijan.
"Look at the juxtaposition: Azerbaijan's closest ties are with Israel
and the United States," said ICG's Mr Sheets. "Armenia's relations
with Iran are purely pragmatic."
The new sanctions on Iran will test Armenia's loyalties between its
old ally Iran and its new European orientation, said Richard
Giragosian, director of the Yerevan-based Regional Studies Centre
(RSC).
In August, Reuters reported that the Iranian regime was attempting to
expand banking relationships in Armenia as a "convenient' location
where it could skirt international sanctions. Armenian officials
strongly denied the report, although their adherence to international
banking sanctions against Iran has been questioned in the past by
western officials.
Yet, Mr Giragosian said, Iran looks at the South Caucasus as a region
where it could procure "critical elements" that sanctions have
restricted.
"Many [Iranian] Revolutionary Guard units have pursued over the past
several years setting up joint ventures with foreign partners - front
companies - designed to pursue technical spare parts for military use
and nuclear centrifuge development," he said.
Such front companies have been closed in recent years in Dubai and Kuala Lumpur.
"There is new concern that Armenia, Georgia, India, and maybe even
Turkey may become attractive for such a pursuit," said Mr Giragosian.
http://www.thenational.ae/news/world/middle-east/iran-may-look-north-to-skirt-us-sanctions