Scrapping Of Russian-Armenian Railway Deal ‘Not On Agenda’

Russian and Armenian officials are not discussing the possibility of ending Russian management of Armenia’s railway network, Deputy Prime Minister Mher Grigorian said on Wednesday.

The Russia Railways (RZD) company runs the network called South Caucasus Railway (SRC) in line with a 30-year management contract signed with the former Armenian government in 2008. The deal committed it to modernizing Armenia’s disused and rundown railway infrastructure with substantial capital investments.

An Armenian law-enforcement agency effectively accused SRC of investment-related fraud after raiding its offices and confiscating company documents in August 2018. Both SRC and its Russian operator denied any wrongdoing.

Russia’s Deputy Transport Minister Vladimir Tokarev said last month that the continuing criminal investigation has disrupted RZD’s operations in Armenia. He said the state-run company managing Russia’s vast network of railways is therefore considering pulling out of the 2008 deal.

Tokarev and RZD’s chief executive, Oleg Belozerov, discussed the dispute with Prime Minister Nikol Pashinian in Yerevan on Tuesday. Grigorian, who was also present at the meeting, insisted that “the issue of terminating the contract is not on the agenda” of either side at the moment.

The deputy premier said that the talks were “constructive” and focused on RZD investments in Armenia. “We want -- and I think this desire is reciprocal -- to ascertain those investment projects numerically for the coming years,” he told reporters.

Grigorian confirmed that the Armenian government is dissatisfied with RZD’s compliance with its investment commitments. “We have only two trains that look like transport equipment meeting European standards,” he said. “This issue was also discussed and our position also took the form of certain demands.”

According to an RZD statement, Belozerov insisted at the meeting with Pashinian that his company is fully complying with the terms of the 2008 deal, having invested almost $250 million in the Armenian railway network over the past decade.

“The head of RZD pointed out that the main condition for the realization of the project and continued modernization of the [Armenian] railway infrastructure is a settlement of all contentious issues in the spirit of constructive interaction and with the participation of Armenia’s government,” read the statement. It did not say whether the two sides reached any understandings to that effect.

A spokeswoman for Armenia’s Investigative Committee confirmed on Wednesday nobody has been formally charged so far as part of the fraud inquiry into SCR launched by it last November. Grigorian dismissed Armenian opposition claims that investigators are under government pressure not to indict anyone lest they further anger the Russians.