Following free and fair elections, the European Union has offered Armenia a $3 billion aid package, 62 per cent more than previously pledged, as the country attempts to rebuild from its defeat in the conflict with Azerbaijan last year.
On July 9, EU Commissioner for Neighborhood and Enlargement Oliver Varhelyi announced in Yerevan a new aid package worth 2.6 billion euros ($3.1 billion) over five years. This is a one-billion-euro increase above the EU’s previous draught proposal.
The cash is part of a package for the EU’s six post-Soviet Eastern Partnership countries, albeit Armenia’s portion dwarfs that of many others. Ukraine, which has a population of 44 million people compared to Armenia’s population of less than 3 million, will get 1.9 billion euros after signing an Association Agreement with the EU. Azerbaijan will receive a total of 140 million euros.
Officials in Armenia have taken the large aid package as a reward for the peaceful and successful June 20 elections, in which incumbent Prime Minister Nikol Pashinyan won a landslide victory. Many predicted post-election violence, but it did not materialize, and the political turmoil that has plagued the country since the war’s end has subsided.
Pashinyan told Varhelyi that the help was a “response to irreversible democratic reforms going place in Armenia.” European observers found the parliamentary elections “competitive and generally well-managed,” he said. Varhelyi did not specify what the additional funds will be used for, but he did applaud the Armenian authorities for their handling of the polls.
The EU indicated that the initial aid package was allocated for numerous specific programmes, including 500 million euros to support 30,000 small and medium-sized businesses and 600 million euros for transportation infrastructure.
Suren Papikyan, Minister of Territorial Administration and Infrastructures, indicated on July 13 that the 600 million will be used to build a new north-south motorway to the Iranian border. He told reporters that the roadwork would cost $1.5 billion and would entail the construction of many mountain tunnels and bridges.
Iran is also interested in assisting with the road’s construction, according to Mohammad Eslami, Tehran’s Minister of Roads and Urban Development, who visited Yerevan in May and met with Papikyan. The two parties decided to form a joint working group to look into the possibility of Iranian enterprises participating in the proposed roadworks. The group met for the first time in late June in Tehran and will meet again on August 15 in Yerevan.
The funding for the road comes as new transit links with Azerbaijan are being discussed, which could make this road obsolete. The two parties agreed in principle to allow Azerbaijan to transit freight through Armenia to its exclave of Nakhchivan as part of the ceasefire agreement that ended the war on November 10th. The re-establishment of Soviet-era transportation ties between northern Armenia and Nakhchivan may provide a far more direct path to Iran than this new road, but talks on a new transportation accord have stagnated.
In contrast to Azerbaijan, Yeghoyan stated that Armenia’s aid package was a reward for Yerevan’s more pro-European stance. The financing “has a strong political undertone because Azerbaijan refuses to conduct changes, and the EU generally grants funding in exchange for reforms,” he explained. “Recently, there has been a strained relationship between the EU and Azerbaijan.”