What about the North-South Road Corridor ?

The “North-South Road Corridor” is a project of 556 km highway through Armenia (Meghri-Kapan-Goris-Erevan-Ashtarak-Gumri-Bavra) till Georgia. It is one of Armenia’s most strategic pieces of infrastructure. It gives an access to European countries by charting a branch corridor to the Black Sea that could then lead to the bloc’s southeastern Balkan members. This corridor will provide a better transport service, whether of goods or men. A link between Iran (southern border) and Georgia (northern border), in accordance with international standards, which will drive Armenia’s economic growth and integration with the world.

Due to its size, cost and complexity, the North-South Road Corridor is being completed in sections. The first two sections of the North-South corridor were completed in December 2015 (Yerevan – Artashat; Yerevan – Ashtarak).

For the Armenian government, this project is part of a larger economic redeployment strategy. A construction which should soften the effects of the blockade imposed by Azerbaijan and Turkey. A trade-boosting connection, bringing growth and livelihoods in the Caucasus and Central Asia subregions.

Gyumri – goals and caveat

One of the aims of this project is to get the highway through Gyumri. The goal is to make Gyumri an important step in the flow of goods. For the government and Gyumri town hall, the highway will accelerate the resilience of Gyumri, a resilience through trade and tourism.

However, caution is advised regarding to a logic of short-term profitability which can lead to drifts. The unique promotion of tourism is to be avoided, as much as the financial logic of the attraction of private investors. The development approach must minimize two major risks, on the one hand the destruction of tangible and intangible cultural heritage. On the other the drift which could deteriorate the economic situation of the communities (price increase, decline in economic competitiveness). A risk of “gentrification” may result, long-term inhabitants gradually being replaced, followed by economic and social changes in favor of higher social classes.

Funding and controversies

Asian Development Bank is providing long-term financing for three sections of the corridor through three loans, totaling $ 330 million, which were made in 2009, 2010 and 2014. Each financing package was finalized only when a given section of road was ready to proceed. As an ADB member country, Armenia benefits from ADB’s AAA credit rating, which translates into long term loans at rates well below Armenian government borrowing costs.

ABD reassessed its loan to the tune of $ 500 million to finance this strategic project. A large part has already been used, and the Armenian justice system has launched criminal proceedings following the abuses and offenses committed around this project; losses to the state estimated at 23.5 billion drams (about 48.69 million dollars).

The Office of the Attorney General denounces the non-application of contracts by those responsible for the project between 2009 and 2018 (abuses and doubling of the prices, however, stipulated in the agreement).

This Armenia’s Black Sea-Persian Gulf corridor presents funding and implementation difficulties. And its recovery has already been of interest to certain foreign partner powers. In the past, representatives of 14 Italian companies engaged in this field had come to Armenia to consider the possibility of participating in the project with an author’s investment of 1.5 billion dollars.

The Chinese possibility and the urgency of the COVID-19 crisis

Armenia is in negotiations with a Chinese company on the resumption of construction of the North-South road, said Suren Papikian (Armenian Minister of Territorial Administration and Infrastructure) recently during a session in Parliament.

“We are currently negotiating with the Chinese company“ Sinohydro ”. The epidemic has changed the situation. Nevertheless, not only we, but also the whole world, aim to work in coexistence with the virus. The ministry is taking steps to clarify activities in the near future, ”he said.

The press service of the ministry reports that a telephone conversation took place between the minister and the Chinese ambassador to Armenia H.E.M. Tian Erlong. The interlocutors exchanged on the continuation of the program and the maintenance of the deadlines previously fixed.

“It is important for us to clarify the possibility of the arrival of Chinese partners and the timetable, because for us, the problems will get worse day by day,” said Papikian.

According to him, if the employees of the Chinese company cannot arrive before the health situation deteriorates in Armenia, it will be necessary to start to look for other means.