Infocom

When You Don’t Drive Your Own Train: The Russian Monopoly over Armenia’s Railways

In 2008, Armenia handed over the management of its national railway network to the South Caucasus Railway, a closed joint-stock company owned by Russian Railways, itself a state-owned enterprise of the Russian government. The transfer was carried out under a concession agreement. This means that one of Armenia’s most strategically significant infrastructure assets is operated by a foreign state. Under the terms of the agreement, the company was granted the right to operate the Armenian railway system for a period of 30 years. The concession can be extended by an additional 10 years - until 2048 - if both parties express their intent to do so by August 2027. In this article: The terms under which Armenia’s railway was transferred to Russian management Is the operating company meeting its contractual obligations? Why the government isn’t using its oversight powers under the agreement How the company’s procurement process has escaped public scrutiny The story of a criminal case that was launched - and later dropped - against the operator What current and former railway employees reveal from the inside “These are different Russians, not the ones we knew,” — from Armenian to South Caucasian Along the Debed River in the Tumanyan community, little remains of the once-bustling Kober railway station. The tracks are still there, along with an abandoned building bearing a fading inscription on its facade: “South Caucasus Railway — Kober Station.” Kober station Former station employee Samvel Shahverdyan helps us reconstruct what the now-ruined station once looked like. “This was the station chief’s office, and that one was for the dispatcher,” he says, guiding us to the balcony overlooking the Debed River. “We used to sit here, have our meals.” Locals were quick to point us to Samvel Shahverdyan’s home when we asked who could tell us about the railway’s past. Now 68, Shahverdyan joined the railway in 1977. His grandfather and father were railwaymen too. From working as a switchman to becoming station dispatcher, from Kober to Sanahin, he spent the final decades of his career - 1989 to 2013 - as the chief of Tumanyan station. “In the 1950s and 60s, the railway had so many employees that buildings, shops, and service points were built just for them. They used to show films in the train cars, and the crowds were so big they had to screen the same film multiple times. There was so much movement, it was beautiful. And now... it’s deserted. Nothing’s left but the passing cars. Look at the station building - no one uses it. It’s like a house: if no one lives in it, it slowly falls apart,” Shahverdyan says. Samvel Shahverdyan He recalls and compares: Soviet Armenia was highly developed, and the railway was a vital link - “a state within a state.” Trains once traveled daily to several international destinations. But after the collapse of the Soviet Union, only one route remained: Tbilisi. “After Independence, we said, ‘We’re independent, we’re independent,’ thinking the trains would keep running as before,” Shahverdyan says. “But Armenia’s routes were shut down. Then came the cuts—they downsized and downsized, closed the stations. I don’t know whose decision it was or who it benefited. Who knows?” Armenia’s railway was transferred to Russian management during the final years of President Robert Kocharyan’s administration. “If this option hadn’t been chosen, ‘Armenian Railways’ would have had no salvation,” said then Minister of Transport and Communication Andranik Manukyan, commenting on the decision at the time. “Please understand this correctly - if we had left Armenian Railways in the condition it was in, within just a few years we wouldn’t have had any rolling stock left,” Manukyan had stated. Samvel Shahverdyan remembers that period well. According to him, on the eve of 2008, Armenia’s railway was in a difficult state, and many - including himself - believed that Russian management would bring real change. In 2007, a decision was made to hand over the Armenian railway under a concession agreement - meaning the rights and responsibilities for using, operating, maintaining, and improving the infrastructure would be transferred to a private company for a fixed period. To select a concessionaire, or operating company, a tender commission was formed on October 18, 2007. Two companies applied to participate: Russian Railways JSC and an Indian company. Archived records from the Ministry of Transport and Communication reveal that a month before the application deadline, the Indian company “RITES” withdrew, citing a heavy workload from ongoing projects. As a result, the Russian state-owned company remained the sole contender to take over the operation of Armenia’s railway. On January 31, 2008, South Caucasus Railway, a company established in Armenia, took over the management of the country’s railway the following month. The concession deal included a one-time entry fee of 1.7 billion AMD and an obligation to pay 2% of annual gross revenue to the state. At the same time, the Armenian government committed to annually subsidizing part of the company’s losses from agreed passenger transportation services. According to the contract, the subsidy rate was set to increase gradually: 10% of losses were compensated in 2009–2010, 15% in 2011–2012, 20% in 2013, 25% in 2014–2015, and from 2016 onward - until the end of the agreement - 30%, provided the subsidy must not exceed or equal the concession fee calculated for that year. However, archival documents on the concession process contain no justification for the increasing compensation rates. What the archival documents do contain, however, are other revealing references to the discussions of the time. Notably, on January 10, 2008, then Minister of Finance and Economy Vardan Khachatryan sent a letter to Transport and Communication Minister Andranik Manukyan raising objections to the financial proposal submitted by Russian Railways JSC, particularly regarding the subsidies. He wrote: “According to the profit and loss forecast, the concessionaire is expected to become profitable by 2015, yet subsidies are anticipated for the entire concession period. Moreover, separating the unprofitable segment of operations (passenger transport) and basing specific calculations and subsidy expectations on that cannot be considered acceptable - especially since, as of now (prior to 2008), Armenian Railways CJSC is operating at a profit without any subsidies.” In the years that followed, financial reports from the South Caucasus Railway company reveal that from 2011 to 2022, the company posted profits - while simultaneously receiving subsidies from the state, as allowed under the contract. Thus, although the Republic of Armenia receives a concession fee from South Caucasus Railway each year, it is largely symbolic: nearly the same amount is returned to the company in the form of state subsidies. *It may appear that in 2013 and 2014 the state subsidies exceeded the concession fees, which would constitute a breach of contract. However, an audit review of the years 2008–2013 shows that while a total of 986.5 million AMD in subsidies was calculated for 2009–2012, only 650.8 million AMD was actually paid. Therefore, the subsidy payments exceeding the concession fees in 2013 and 2014 were most likely used to cover the outstanding obligations from previous years. PhD in Political Science and Expert in Russian Studies Narek Sukiasyan notes that concession management is a common practice, especially for small and developing countries, as managing and upgrading such complex infrastructure requires substantial financial resources and advanced technologies - resources that are often out of reach for these states. “But what many countries try to do to prevent such economic or political engagement from turning into political dependency - and hence vulnerability - is to diversify the actors involved. They avoid granting monopolistic control and instead promote a more diversified structure,” he explains. According to Sukiasyan, even a glance at the railway map makes it clear that it is unlikely to generate significant profit, given its limited infrastructure and the fact that it is connected only to Georgia. “States often engage in unprofitable and seemingly unpromising projects because the value lies not in financial return, but in political dividends. That, I believe, is what happened here - Russia gained yet another lever of influence over Armenia,” he says. Arthur Khachatryan, a Member of Parliament from the opposition “Hayastan” faction, responded to our question about whether it is risky for the railway to be operated not by just a private company, but by one owned by another state. He said that when the state hands over infrastructure to private management, it typically attracts investment and leads to better performance. Therefore, there is no formal restriction on whether the shareholder is a foreign state or a private entity. However, Khachatryan notes that outsourcing inherently involves risks: “I’ve always had serious reservations about outsourcing, if only because the state loses the opportunity to develop in-house expertise and becomes increasingly dependent on the private sector.” Former railway worker Samvel Shahverdyan acknowledges that under the new management, the trains and railways changed, locomotive and line infrastructure improved, and the new managers brought discipline and organization - traits he says were not common among Armenians. “But still, there’s no real progress, or at least I don’t see it. Just look at how many stations have been shut down. A railway should function - it should constantly be transporting goods and passengers. But now? Nothing. In the past, there was so much traffic that workers barely had time to maintain the tracks,” he recalls. So what changed, we ask - after all, management was Russian during Soviet times too. “These are different Russians, not the ones we knew,” Shahverdyan replies. “They’ve changed too. Now it’s all about profit. It’s the same everywhere in the world.” Shahverdyan left the railway in 2013, realizing that he could no longer change anything. He spent several years in Russia working as a truck driver before returning to Tumanyan, where he now tends livestock and keeps bees. “Beekeeping will change you completely - it turns you into a different person,” he says. “The social order of bees is based on the idea of socialism. No one exploits anyone; the key is unity.” He misses the old days of the railway, saying life was joyful back then. He wasn’t earning millions, but he was doing the work he loved - and that, for him, meant happiness. Would you return to the railway if given the chance? we ask. In its current state? he clarifies. In this state - no. “As long as both sides see a benefit, nothing gets done. People are told to get married, have children - just so there’s someone to take care of them someday.” “Managers say that female station chiefs work better and are more attentive,” says Anush Hakobyan, head of the Tumanyan station under the Vanadzor Rail Network. She has held the position since 2015 and was the only woman in that role during her first years. “At first, people thought I was just adventurous, but when you do your job well, questions stop coming up. I have loved the railway since I was a child. Back then, they used to bring logs to be unloaded here, and the distinct smell would linger in the station all day. Since that time, I’ve always had a connection to the railway - it’s always drawn me in… It’s a great happiness to love your work,” Hakobyan recalls. Anush Hakobyan joined Tumanyan station at age 20 and has now worked there for 36 years. When she started, the station had 39 employees; today, only four remain. “The last employee was the cashier, who left around 2008 or 2009. After the lockdowns and many route cuts, some positions simply became unnecessary,” she explains. Anush Hakobyan In Hakobyan’s view, the Armenian railway was in dire condition on the eve of its transfer to Russian management. Trains could barely exceed speeds of 5 km/h, derailments were frequent, equipment was falling apart, and rescuing the system with local resources was impossible. “Armenia simply couldn’t afford to maintain it. We even feared the railway might shut down altogether. We had just come out of the past difficulties - conditions were poor. Someone needed to step in and invest. Other than Russia, there was no country really interested. India had applied, but later withdrew. China’s name came up too, but apparently certain terms didn’t align. As long as both sides see a benefit, nothing gets done. It’s like when people are told to get married, have children - just so there’s someone to take care of them someday. I mean, people are even having children hoping they’ll help them in the future - so why would business work any differently?” Hakobyan explains. She’s skeptical that Armenia will be able to successfully operate the railway once the concession contract with the Russian company expires. “If they manage it the same way they did before 2008, they’ll run it for a few years and then start dismantling and selling it off. Since 2008, two governments have changed, and by 2038 there might be another one - or even the same one - but I still don’t see how we’ll manage on our own. A railway needs order and discipline, and we’re a people far from that,” she says. According to Hakobyan, the Russian side has fully met her expectations since 2008: trains have been modernized, rail lines improved, and salaries are never delayed. Under the concession agreement, the Russian company committed to investing a total of 174.5 billion AMD by 2038 - 122.3 billion in infrastructure and 52.2 billion in rolling stock. While the railway infrastructure remains the property of the Republic of Armenia, the rolling stock is owned by the company. According to data provided by the Ministry of Territorial Administration and Infrastructure, as of 2024, 144 billion AMD had already been invested - 15 billion more than originally planned for the 2008–2024 period. Of that amount, 11 billion was allocated to rolling stock. Notably, under the terms of the agreement, after the contract expires, the rolling stock will either remain the property of South Caucasus Railway or be sold to Armenia at its residual value. In other words, if Armenia wants to retain the upgraded rolling stock, it will have to pay for it. Anush Hakobyan recalls a time when trains from Armenia ran to Azerbaijan, Abkhazia, and Makhachkala. Today, routes are limited to Tbilisi and, during the summer, Batumi. “Though there are fewer destinations now, all trains entering Armenia pass through here. Back in Soviet times, rail traffic was far more active. Now we're under blockade, but even so, rail remains the most environmentally friendly mode of transport. And regardless of the weather, the railway never stops,” she says. When Russian Railways was submitting the investment proposal, it didn’t overlook these former routes either. In its concession proposal, the company presented 4 investment scenarios. The first, and the only one currently in effect, envisioned continued operation of the sole international corridor via Georgia. The second scenario included the possible reopening of rail links with Turkey starting in 2009, which would have raised investments to 183.9 billion AMD. A third version also considered re-establishing connections with Azerbaijan, boosting investment to 538.5 billion AMD. And under a fourth scenario - if rail access through Abkhazia to Russia were restored - investments would have reached 641 billion AMD. Reflecting on the effectiveness of South Caucasus Railway’s investments, Vahe Davtyan, a political scientist and professor, says that while the funds have undeniably improved infrastructure, rolling stock, and service quality, the overall investment remains modest compared to other regional railway networks. “There are two key issues,” he explains. “First, the allocation of funds does not yet meet the full technical and operational modernization needs of the railway. Second, the regional political and geoeconomic landscape hampers transit potential and the opening of new routes. So while some progress is visible, the railway still isn’t evolving to its full capacity.” "The Russian side expects legal proceedings to be resolved": Criminal Cases South Caucasus Railway submits annual financial statements to the ministry, approved by an independent auditing company. According to the concession agreement, the Ministry of Territorial Administration and Infrastructure also has the right to commission an independent audit to verify the credibility of the concession fee calculations and, if necessary, to demand additional payments. However, over the 17 years of the Russian company’s operation, the Armenian side has exercised this important oversight mechanism only once. In 2014, the former Ministry of Transport and Communication commissioned an audit of the company’s special-purpose financial reports covering the years 2008–2013. The audit results, presented in 2015, revealed that the company had overstated the subsidy amounts requested for 2009–2013 by around 132 million AMD - including approximately 5 million AMD in 2009, around 18 million in 2010, around 33 million in 2011, and around 76 million in 2012. According to the audit, investments made in infrastructure were also overstated by 551 million AMD. In addition to the audit findings themselves, the auditing company also submitted its own observations to the Ministry of Transport and Communication. Among other issues, the company pointed out that the concession agreement does not clearly define the term “investment” - which expenses qualify as investments, at what stage of spending they are considered completed, and to what extent the classification of an expense as an investment depends on its effectiveness. The methodology for calculating the amount of subsidies was also noted as unclear. For the next three years, the audit results had no significant consequences. The issues identified within the company resurfaced only after the revolution in 2018. Beginning in August 2018, searches were conducted at the company, and documents were seized. In a September 2018 interview with the Russian newspaper Kommersant, Prime Minister Nikol Pashinyan stated that the scale of abuses reached $60 million. On December 17, 2018, the Investigative Committee of Armenia announced that a criminal case had been initiated concerning the alleged abuse of power by a former Deputy Minister of Transport, Communication, and Information Technologies. The statement said the deputy minister had received an audit report detailing unfulfilled construction work worth 428 million AMD in the railway infrastructure. However, he failed to request substantiated explanations from the company and, acting in the interest of a group, did not report the issue to law enforcement authorities. As a result, 428 million AMD in investment funds were embezzled. Moreover, no effective steps were taken to address the broader financial misconduct uncovered in the investment process or to compel the company to properly fulfill its obligations under the concession agreement. On December 25 of the same year, Armenia’s Investigative Committee announced that preliminary investigation had revealed evidence of irregularities in the investment process by the South Caucasus Railway CJSC. To determine the actual scale of these violations, the efficiency of investment fund utilization, the legality of financial gains derived from the management of concession assets and rolling stock, and other relevant circumstances, an examination was ordered by the investigator. While the investigation was ongoing, in September 2019, the Russian TV channel RTVI, citing a well-informed source, reported that the Russian operator intended to terminate its agreement with Armenia. This was later confirmed by the press service of Russia’s Ministry of Transport. In April 2020, Russian Foreign Minister Sergey Lavrov stated that allied relations should be reflected in all areas, including the economic sphere: “In the economic domain, the Russian side expects that the legal proceedings initiated in recent years against joint ventures, including South Caucasus Railway, will be resolved without attempting involve things that are uncharacteristic of relations between allies.” In response to Lavrov’s statement, Armenian Deputy Prime Minister Mher Grigoryan noted: “Foreign-owned companies operating in Armenia, including those with Russian capital, are first and foremost resident entities. They are employers and taxpayers, and we are equally interested in ensuring favorable conditions for their stable and efficient operation. At the same time, the Government of Armenia will not tolerate any company operating outside the law, regardless of circumstance. On this issue, we have mutual understanding with our Russian partners at the highest political level.” Four months after these statements, in September 2020, the Ministers of Transport of the Russian Federation and the Republic of Armenia’s Ministry of Territorial Administration and Infrastructure signed a protocol of consultations aimed at resolving disagreements that arose during the financial and economic audit of South Caucasus Railway CJSC by Armenian law enforcement agencies. Among other agreements, the parties decided that: The Russian side would reallocate the investment expenditures stipulated by the concession agreement for 2020-2024, increasing them to at least 39 billion AMD. The parties would prepare an updated investment expenditure plan for 2025-2038, identifying sources and mechanisms to cover the estimated shortfall of approximately 95 billion AMD in investment resources for that period. The Armenian side would consider the possibility of state support for the relaunch of the Kavkaz-Poti rail-ferry connection. The parties would discuss amendments to the concession agreement to remove limits on subsidies for passenger transportation. One year after the signing of this protocol, in March 2021, the criminal case was closed due to lack of evidence of a criminal offense. The Ministry of Territorial Administration and Infrastructure is currently developing a new subsidy system draft. The ministry did not provide us with the draft, stating that after receiving, summarizing, and coordinating the positions of the relevant stakeholders, the final version will be put up for public discussion. MP Artur Khachatryan considers it a mistake that the state does not exercise its right to order independent audits, since the South Caucasus Railway operates in the public interest. Political scientist Vahe Davtyan believes that the reasons for not using the audit possibility and for closing the criminal cases are political. According to him, after the 2018 revolution, the new administration began targeting Russian capital, including the South Caucasus Railway company. “Of course, there were many internal problems in the company, which Armenia’s new authorities had numerous political and diplomatic levers to resolve. However, contrary to political ethics and interstate relations logic, Prime Minister Pashinyan decided to talk about corruption in the company at a meeting with Russian media, creating a climate of mistrust in Moscow-Yerevan relations. And yes, Lavrov’s reaction was quite natural in this context,” the political scientist says, adding that these events were followed by the 44-day war, Moscow’s mediation, certain geopolitical re-evaluations, a move away from harsh anti-Russian stance, and so on, all of which inevitably influenced previously made decisions regarding the company. Expert in Russian Studies Narek Sukiasyan states that after the revolution, a pattern emerged in relations with Russia, when Armenia made “demonstrative steps, often symbolic,” to show independence from Russia, which provoked very negative responses from Russia. “In other words, the pursuit of independence, often pursued by not very sophisticated diplomacy, created a situation where Armenia became vulnerable to Russian pressure, and to counteract negative attitudes, it took steps that in turn led to new forms of dependence on Russia,” he explains. Pashinyan: By 2024, approximately 39 billion AMD in investments must be made in the railway sector. I want us to grasp the scale of this amount. One year after the signing of the protocol and four months after the criminal case was dropped, on August 18, 2021, Prime Minister Nikol Pashinyan announced during a Cabinet meeting that Armenia had reached an important agreement with South Caucasus Railway: “By 2024, around 39 billion AMD in investments must be made in the railway sector. I want us to grasp the scale of this amount. We’ve had quite lengthy and detailed discussions with South Caucasus Railway, and I am very pleased to note that an agreement has been reached. We can now expect that by 2024, we will have a railway system of significantly improved quality.” According to the company’s original investment project, South Caucasus Railway was expected to invest about 15 billion AMD between 2021 and 2025. In effect, the protocol significantly revised the amount of investment initially planned for 2020–2024. As early as September 2021, the Ministry of Territorial Administration and Infrastructure had provided us with a year-by-year breakdown of the planned expenditures for 2020–2024. Updated data provided by the Ministry of Territorial Administration and Infrastructure reveal that planned investment targets were nearly met only in 2020 and 2021. In contrast, the investments made between 2022 and 2024 fell significantly short of expectations. In total, 28.445 billion AMD were invested—10.563 billion less than the amount agreed upon in the protocol. “All companies of public importance must be required to disclose more information about their operations”. Procurement practices South Caucasus Railway CJSC is not subject to Armenia’s Law on Procurement, nor are there procurement regulations outlined in the concession agreement. The company only publishes calls for tenders on its website, offering no information about the participating or winning companies, nor about the contracts signed. On March 18 of this year, we submitted a FOI request to South Caucasus Railway, asking under which law or regulation its procurement processes are governed. After 45 days, the company responded that procurement is carried out according to internal rules approved by the general director’s order - rules which are not subject to public disclosure. On May 12, we requested access to all tender announcements and resulting contracts from the previous year. The company declined, citing commercial, banking, and personal confidentiality. A few days later, on May 15, we sent another FOI request asking for the names of participants and winners in procurement tenders over the last ten years, along with the subject of each purchase and contract value. Again, our request was denied on the grounds that the information contained commercial and service-related confidentiality. Artak Kyurumyan, an expert in public financial management, argues that all companies of public importance must be required to disclose as much information as possible about their operations, including financial reports and procurement documentation. He emphasized the risks involved: “One of the key concerns is that the government subsidizes certain segments of the company’s activities - specifically in passenger transport - and we have no insight into how oversight is exercised, how costs are calculated, or how the subsidy amounts are determined.” The expert further notes that when it comes to the provision of public services, the public interest must take precedence. “If the state delegates such responsibilities to a private entity, it must also establish benchmarks to assess performance, as well as robust oversight mechanisms and a qualified team to enforce them,” the expert said. Opposition MP Artur Khachatryan believes that if a private company makes purchases for its own operational needs and those do not impact consumer tariffs, then state oversight may not be justified. As far back as 2016, Armenia’s State Commission for the Protection of Economic Competition conducted a six-month study and concluded that South Caucasus Railway often carried out its procurement either through formal, non-competitive tenders or without tenders at all. At the time, Commission Chair Artak Shaboyan stated, “It turned out that the company itself decides from which supplier and under what terms to purchase goods and services. Even when tenders are held, they are often merely formalities. In some cases, we found that companies offering higher prices were declared winners.” The Commission also uncovered that the company had built a production facility at the Gyumri locomotive depot - spending 100 million AMD on construction and 300 million on equipment - to carry out wheelset repairs domestically. Yet, after completion, the repairs continued to be outsourced abroad. The 2015 audit had also revealed that although the company had an internal legal department, it frequently outsourced legal services, incurring significant costs that, in some instances, were not commensurate with the outcomes received. Public financial management expert Artak Kyurumyan notes that if procurement processes are not efficient, and cost-conscious, abuse is inevitable. "These abuses create inflated costs, which may ultimately be included in the subsidy amount. In other words, the Armenian government - and by extension, Armenian taxpayers - will end up financing the company’s inefficiencies,” Kyurumyan warned. Looking for documents and competent lawmakers on the topic Under the concession agreement, assets were transferred to the Russian side through a formal handover document, which specified the railway infrastructure, fixed, and movable property that the Republic of Armenia granted to South Caucasus Railway for operation. In principle, this document - outlining what exactly was handed over to the Russian company - should have been readily accessible to journalists upon request. In reality, obtaining it was far more complicated. At the time of signing the agreement, the authorized state body was the Ministry of Transport and Communication. Oversight was later transferred to the Ministry of High-Tech Industry and, from 2019, to the Ministry of Territorial Administration and Infrastructure (MTAI). Initially, both the Ministry of High-Tech Industry and MTAI claimed they did not have the handover document. However, following a letter we addressed to Prime Minister Nikol Pashinyan, MTAI managed to locate it and eventually provided it to us. But even then, the story didn’t end: we received an incomplete version of the document - missing seven annexes detailing the list of transferred assets. Even a second letter to the Prime Minister didn’t help. The annexes are not kept at MTAI, the Ministry of High-Tech Industry, the Government Office, or even in archival documentation of the concession process. We sent a formal inquiry to Prime Minister Pashinyan, asking why these annexes are missing and what steps, if any, are being taken to recover them. The Prime Minister's Office redirected our request to MTAI, which then requested 30 days to respond. Armen Khachatryan, Head of the Government's Public Relations Department, told us that MTAI is the authorized body and that they have no involvement with the missing documents. Therefore, all questions should be directed to the ministry. Under the terms of the concession, when the agreement expires, South Caucasus Railway is obligated to return the concession assets to the Republic of Armenia. But how will the authorities verify the proper return of these assets without the annexes detailing what was originally transferred? While preparing this article, we asked the Ministry of Territorial Administration and Infrastructure to arrange an interview with the Head of its Railway and Water Transport Policy Department. Although we did not specify a deadline, spokesperson Sona Harutyunyan responded that an interview was not possible due to scheduling constraints. We then informed her that we were open to speaking with any competent official from the ministry. The response was: “We are not considering any interviews at this time. If you have questions related to the topic, please send them in writing.” A week later, we requested an interview with Deputy Minister Armen Simonyan, a member of the Board of Directors of South Caucasus Railway and a senior lecturer at Saint Petersburg State University. Harutyunyan asked us to follow up in a week as Simonyan was on a business trip. When we did, she informed us that the Deputy Minister would be unavailable for two more weeks and suggested scheduling after June 19. Given the scope of our questions and their relevance to the ministry's responsibilities, we submitted a written inquiry and asked for a response within three days. MTAI again asked for 30 days. We also sought the opinion of MPs from the ruling Civil Contract party on the railway concession, future development prospects, and the lack of public oversight in procurement. Not a single lawmaker from the 69-member Civil Contract faction agreed to speak with us. We first reached out to Deputy Speaker of Parliament Hakob Arshakyan, who previously served as Deputy Minister of Transport and later as Minister of High-Tech Industry. His assistant told us he was too busy. Vahe Ghalumyan, Chair of the Parliamentary Committee on Territorial Administration and Local Self-Government, did not respond to our request for an interview. His deputy, Aren Mkrtchyan, declined to comment, citing lack of competence on the subject. The same explanation came from Babken Tunyan, Chair of the Economic Affairs Committee, and MP Vahagn Aleksanyan. We attempted to contact faction leader Hayk Konjoryan to either get his perspective or be referred to a knowledgeable colleague. His assistant promised to call back if the answer was positive. We never received a call. Finally, we also requested an interview with South Caucasus Railway. After being denied, we submitted our questions in writing. As of today, we have received no response from the company regarding our questions. The Future of the Railway: "The issue of contract extension should be considered a strategic decision." The concession agreement for the South Caucasus Railway is valid for 30 years, until 2038, with an option to extend it for an additional 10 years - until 2048 - provided that both parties notify each other of this intention by August 2027. Given that 2027 is not far off, we asked the South Caucasus Railway company whether they have such intentions and if they have informed the Government accordingly. The company has not responded to our inquiry. We also addressed questions about the extension options and alternative management models to the Ministry of Territorial Administration and Infrastructure. As noted earlier, the ministry has requested one month to respond to these and other questions. Political scientist Vahe Davtyan believes that at this stage, when the South Caucasus Railway has managed to maintain infrastructure viability, implement certain modernizations, and resume international passenger services, extending the contract for 10 more years could ensure operational stability and mitigate transitional risks. However, Davtyan emphasizes the importance of also considering alternative scenarios: “Regional developments, especially the discussions on new transport corridors, suggest that a new approach to the railway system is needed. This may include gradually increasing state oversight over the sector or establishing a new public-private partnership model more closely aligned with national strategic interests. Therefore, the contract extension issue should be treated not only as a technical matter but as a strategic decision, grounded on clear assessments of efficiency, controllability, and adequate response to regional developments.” Regarding Armenia’s capacity to manage the railway without private cooperation or a concession, Davtyan notes that, in theory, the country could have the institutional and technical resources but is severely limited by the absence of a systemic and doctrinal basis in transport policy: “Railway management cannot be seen solely as a technical or financial issue; it requires a clearly formulated transport doctrine as part of a national strategy - something that currently does not exist.” He also points out that ending the concession and changing the management model requires political will, professional human resources, and clear investment mobilization - areas where significant challenges remain. According to Davtyan, before reconsidering the concession model, it is necessary to redefine Armenia’s transport policy as a component of national security, develop an appropriate doctrine, and only then evaluate the feasibility of alternative management scenarios. On the possibility of interest from other countries or companies in operating the Armenian railway, Davtyan says such interest would likely be driven solely by geopolitical motives: “Theoretically, if regional reopening and communication restoration take place, the Armenian railway could become a hub attracting interest from various state and private actors pursuing economic and strategic goals. This would primarily include South Caucasus and neighboring countries, as well as Turkey, Iran, and Central Asian states. It is also important not to rule out interest from Chinese companies, partly within the framework of the Belt and Road Initiative, which aims to expand transport networks toward Europe and the Middle East.” Expert in Russian Studies Narek Sukiasyan also addresses the issue of regional transport reopening, warning that if the railway remains under Russian control, it could pose risks: “Freight turnover - a key component of external economic diversification - could face various risks, with technical reasons, but political consequences. In other words, the railway, which could become critically important, might fail to operate for numerous conceivable reasons. At present, this risk is low because our railway is mainly connected to international infrastructure networks only via Georgia, but as these connections diversify and expand, the potential impact would increase,” Sukiasyan explains. Thus, in 2008, Armenia handed over its railway system to the South Caucasus Railway for a 30-year concession, with an annual concession fee set in the agreement. However, this fee is largely symbolic due to government subsidies for passenger transport. During the years of Russian management, some investments were made, but the lack of effective oversight, transparency issues in procurement, and risks of political influence raise serious questions about the model’s efficiency. Now, as the deadline approaches for a decision on extending the contract, both the responsible ministries and the lawmakers prefer to avoid addressing these issues. Yet, it is essential to provide an honest answer: can Armenia independently manage the system? If not, at least a more transparent, accountable, and publicly supervised management model must be ensured. From left in the main photo: Alexey Melnikov, General Director of South Caucasus Railway CJSC; Sergey Kopirkin, Russian Ambassador to Armenia; Alexey Overchuk, Deputy Prime Minister of Russia, Armen Simonyan, Deputy Minister of Territorial Administration and Infrastructure. Authors: Lucy Manvelian, Lilith GrigorianVisuals by Lucy ManvelianVideo by Roman Abovyan

22:27 - 18 June, 2025