Page last updated at 23:56 GMT, Thursday, 24 July 2008 00:56 UK

Isolated Armenia leans on Iran

By Robin Forestier
BBC News, Yerevan

Iran does not have too many friends these days, but in a far corner of the Caucasus, on the edge of Europe, it is forming a special relationship.

Wine-tasting cellar in Armenia
Noy Brandy's wine-tasting sessions are popular with Iranian tourists
Deep in the cellar of the Noy Brandy factory in Yerevan, Armenia, there is a pungent, but not unpleasant smell of ageing, fortified wine.

On an upturned wooden cask sit a dozen glasses, and a bottle of 1944 sherry. The company's wine-tasting sessions are popular with tourists and most of them, according to tour guide Anna, come from Iran.

"Ten metres underground, they think Allah is out of range," she smiles. "They don't want to taste the wine, they want to drink it."

Across town, Omid Mojahed is one such Iranian looking for more than just a taste of Armenia. He is a 28-year-old student and an entrepreneur at heart.

We attach great importance to our relations with Iran. One can choose one's friends but not one's neighbours
Armen Movsisyan
Armenian minister

He spends most of his time away from his books, working on his businesses, which include a travel agency working exclusively in the Iranian market.

"In summer I think that 90% of tourists are Iranian. Armenia is so close by and has attractive things - cafes and nightclubs, and beautiful Lake Sevan."

Omid has also just opened a Persian restaurant, catering for locals as well as Iranian expats, keen for some home cuisine.

Gathered at the bar around a smoking pipe, a group of Iranian students are relaxing after their exams.


Twenty-year-old Mehdez explains that Armenia is popular with thousands of young people who cannot get a place in Iran's over-subscribed higher education system.

"I chose to study in Yerevan because it's an easier situation. Here we have more freedom," she says.

"But of course anything that we do here, we can do in Iran - just not in public."

Geographic isolation

Part of that freedom includes an increasingly liberalised economy, and that makes Armenia attractive to foreign investment.

The Armenian capital is hardly an international economic powerhouse, but there are signs that Iranian investors sense an opportunity.

On one street, many of the stores are Iranian-run. One of them is owned by Muhammad Rahimi.

Muhammad Rahimi, trader in Yerevan, Armenia
Muhammad Rahimi benefits from Armenia's dependence on Iran

He started trading household goods 10 years ago. Business, he says, gets better and better. Practically every item he sells - from pots and pans to air-fresheners - has been imported from Iran.

Like many of his compatriots, Muhammad benefits from Armenia's geographical isolation.

War with Azerbaijan over Nagorno-Karabakh in the 1990s led to the closure of its borders with Azerbaijan and an unsympathetic Turkey.

That leaves landlocked Armenia looking towards Georgia to the north, and Iran to the south.

"Georgia, economically, is worse than Armenia," says Alexander Iskandarian, director of the Caucasus Media Institute.

"But Iran has a population of 70 million and it has oil and gas. It's rich by regional standards, so you should have normal relations with them. It's dangerous not to do so."

Yet trade turnover between the two countries remains modest, at just $200m (100m) a year, according to the economic department at the Iranian embassy.

US disapproval

That has not stopped the United States from expressing concern about Armenia's ties with its neighbour. Those ties include the new Iran-Armenia gas pipeline, frequent bilateral talks and state visits, not to mention a sizeable Armenian minority in northern Iran.

In this year's Country Reports on Terrorism, the US state department said warming relations between the two countries made Armenia "reluctant to criticise publicly objectionable Iranian conduct".

The little country courts the Americans, Europeans and Russians. It is a difficult balancing act to follow.

Iranian students in a Perisan restaurant in Yerevan
Iranian students say they enjoy more freedom in Armenia

But Armenia's unique relationship with the regional power - Iran - is one it cannot afford to abandon.

Moreover, the two countries are united by a shared sense of isolation from the rest of the world.

"Let's not forget that Armenia is in a virtual blockade. We attach great importance to our relations with Iran. One can choose one's friends but not one's neighbours," says Armen Movsisyan, Armenia's minister of energy.

For those Iranians who have chosen to make a home in Armenia, geopolitics may not be foremost in their minds, but they are equally as pragmatic as the politicians.

"I'm no expert in international relations. All I know is we always had good relations with Armenia and that's why I like working here," says the trader Muhammad Rahimi.

Back in his restaurant, Omid Mojahed has no plans to leave while the going is good.

"Everything will be okay for me here, that's why I prefer to stay," he says.

"I like Armenian people, and it's difficult for me to want to leave my friends. When you come to Yerevan for a month, you will stay in Yerevan forever!"

Armenia ends state of emergency
21 Mar 08 |  Europe
Karabakh casualty toll disputed
05 Mar 08 |  Europe
In pictures: Yerevan crackdown
01 Mar 08 |  In Pictures
Country profile: Armenia
03 Jul 08 |  Country profiles
Timeline: Armenia
03 May 08 |  Country profiles

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific