Russia seeks to keep Armenia railway concession
“Armenia is not fixated on taking the concession away from Russia. The issue is ensuring that the railway operates to an adequate standard,” Armenian Prime Minister Nikol Pashinyan said in response to a question about whether the authorities might strip South Caucasus Railway of its rights to operate Armenia’s railway network.
Since 2008, South Caucasus Railway has operated Armenia’s railways under a concession agreement. The company is a wholly owned subsidiary of Russian Railways. The concession runs for 30 years. Since the Russian company took over, freight traffic has halved, some routes have ceased operating, and the company has yet to deliver on its mandatory investment commitments.
Pashinyan said Western companies were ready to invest, but they saw the existing Russian concession as an obstacle. Russia, meanwhile, considers further investment “economically unviable”.
“We say: fine, if it is economically unviable, then sell or transfer the concession rights to those who consider it viable. Alternatively, we will find ways to solve our problems ourselves,” the prime minister told journalists.
Pashinyan also said he had agreed with Russian Railways CEO Oleg Belozerov to set up a joint working group. The group will have three months to answer all the Armenian government’s questions, including whether the Russian side is willing to invest in developing Armenia’s railway network. Yerevan will decide on its next steps only after that.
The prime minister believes the scale of any potential Russian investment could put an end to all “political debate”. In particular, he was referring to concerns that Western countries might refuse to use a railway network under Russian control.
“If Russia, for example, says, ‘I will invest $3 billion’, that means it has no concerns that the countries we mentioned might choose alternative routes. It would mean Russia is confident that these countries will use these railway lines and that its investment will pay off,” he stressed.
Political analyst Samvel Meliksetyan told JAMnews that Yerevan’s concerns had political rather than economic or investment-related roots from the outset.
For some time, people have been saying that international partners are unwilling to use a railway network under a Russian concession. This, in turn, prevents Armenia from becoming a transit country. Meliksetyan believes Armenia has “made concessions” compared with its original position.
“By deciding to set up a working group, Armenia is trying to postpone the serious and painful consequences that could follow if Russia decides to use its leverage,” he said.
The political analyst recalled that Moscow had hinted at a possible increase in gas prices and was already applying economic pressure by banning Armenian exports.
In the expert’s view, the creation of an Armenian-Russian working group effectively turns the concession dispute into a “negotiation process”.
“Three months from now, another issue could emerge and take a further three months to discuss. The problem would remain unresolved, but this approach would help avoid further deterioration in relations with Russia,” he said.
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Pashinyan: “We have no problem with the Russian concession”
The prime minister recalled discussions with the Russian side in April 2026. At the time, Russian partners said investment in Armenia’s railways was economically unviable and that investment from other countries would be unacceptable.
“During the blockade, we might have said, ‘Fine, we’ll manage somehow.’ But now, as the region opens up, we cannot accept leaving our railway in its current condition. It needs investment, and we are talking about substantial sums,” he said.
Pashinyan stressed that investment was essential if Armenia’s railway network was to compete with the Kars–Dilucu line that Turkey is building. At the same time, he noted that competition might not even become an issue, given the expected growth in freight traffic across the region.
Speaking about his talks with Belozerov, Pashinyan said he had made it clear to his Russian counterpart that Armenia did not object to Russian management under the concession agreement. However, Yerevan expected the railway to become competitive.
“Our analysis of how to achieve this goal shows that a change in the concession management model would be a rational approach, particularly by involving third countries in the process,” the prime minister said.
He added that Russian partners could put forward their own proposals if they knew how to resolve the issue.
Moscow has yet to offer any concrete solutions. However, Russian partners assured Armenia that sanctions would not obstruct railway operations.
Nikol Pashinyan outlined the strategic priorities that the Armenian government expects to address now that the region anticipates the reopening of all borders:
- Reopening the Ijevan–Hrazdan railway section;
- Building a facility in Akhurik to change wheelsets, as Turkish railways use a different track gauge;
- Connecting the Ijevan–Hrazdan railway line to the Vanadzor–Gyumri line.
“We understand that this is an extremely difficult task, both in terms of investment and from a technical and organisational perspective. But we cannot simply say, ‘You know, there are difficulties, so we will not pursue this.’ We will approach our friends in the most friendly manner possible, but these issues must be resolved,” he stressed.
What Armenia’s prime minister and the head of Russian Railways discussed
The previous day, Pashinyan received a delegation led by Russian Railways CEO Oleg Belozerov.
According to the Armenian prime minister’s office, Pashinyan stressed that his government aims to integrate Armenia’s railway network with those of neighbouring countries. The meeting covered:
- Opportunities arising from regional developments;
- Measures to improve the competitiveness of Armenia’s railways and integrate them into international transport routes;
- Railway reconstruction projects, particularly the Gyumri–Akhurik–Turkish border line and the Yeraskh–Nakhchivan line, as well as the opportunities these projects would create;
- Infrastructure development carried out by South Caucasus Railway under the concession agreement;
- Management efficiency, existing problems and possible solutions.
Comment
Political analyst Samvel Meliksetyan believes Russia proposed setting up an Armenian-Russian working group on the railway issue to delay the process and buy time.
In his view, Russia intends to maintain its presence in Armenia’s railway network. He explains that Moscow wants to take advantage of the expected reopening of regional transport links and secure a political role in the process.
“This matters to Russia economically, in terms of its image and in terms of its geopolitical presence in Armenia. Moscow does not want to lose a very important lever of influence as the region’s transport links reopen.”
Meliksetyan believes the Armenian authorities are trying to act constructively and avoid escalating tensions with Russia. In this context, he recalled the “instruments of blackmail” that Russia openly uses.
At the same time, the political analyst does not rule out the possibility of Russian investment in Armenia’s railways.
“The scale of this investment would not pose a significant problem for Russia. We are talking about just tens of millions of dollars. Even amid Russia’s current crisis, that is a very small sum. Its daily military spending runs into billions of dollars.”
According to Meliksetyan, three months of work by the Armenian working group are unlikely to persuade Russia to relinquish the concession.
“Formal decisions or partial amendments to the concession agreement in Armenia’s favour are possible. However, this is a political issue. In the near future, I do not see a political solution that would not lead to a further deterioration in Armenian-Russian relations.”
Russia seeks to keep Armenia railway concession