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PP RUEHBC RUEHDBU RUEHDE RUEHDIR RUEHKUK
DE RUEHKB #1309/01 3050710
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P 010710Z NOV 07
FM AMEMBASSY BAKU
TO RUEHC/SECSTATE WASHDC PRIORITY 4138
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
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RHEHNSC/NSC WASHDC PRIORITY
RUEHDIR/IRAN RPO DUBAI PRIORITY
RHMFISS/CDR USEUCOM VAIHINGEN GE PRIORITY
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C O N F I D E N T I A L SECTION 01 OF 03 BAKU 001309 
 
SIPDIS 
 
SIPDIS 
 
TREASURY FOR KRISTEN HECHT AND COLLEEN EDDY 
 
E.O. 12958: DECL: 10/21/2017 
TAGS: ECON PBTS PGOV PHUM PREL KIRF IR AJ AM
SUBJECT: IRAN AND ARMENIA PURSUE STRONGER TRADE TIES, WHILE 
SUSPICIONS LINGER OVER IRAN'S REGIONAL AMBITIONS 
 
REF: BAKU 766 
 
BAKU 00001309  001.2 OF 003 
 
 
Classified By: DCM Donald Lu for reasons 1.4 (b) and (d). 
 
¶1.  (U) This message has been cleared by Embassy Yerevan. 
 
¶2.  (C) Summary:  During an October 1-5 visit to Armenia, 
Baku-based Iran Watcher met with foreign policy analysts, 
religious leaders, academics, and bankers to further explore 
Iranian-Armenian relations.  Armenian analysts believe Iran's 
nuclear ambitions are unstoppable, with Iran increasingly 
convinced that U.S. forces are spread too thin to pose a 
serious military threat to Iran.  Armenian commentators 
argued that Iran benefits from the regional status quo and 
particularly the unresolved Nagorno-Karabakh conflict. 
 
¶3.  (C) Summary continued:  Iran and Armenia enjoy close 
cultural, trade, and economic ties.  Bishop Paren Avedikyan 
estimated that only 100,000 to 150,000 Armenians remain in 
Iran, adding that many of these Armenians continue to seek 
guidance from Armenia even though they fall under a 
Lebanon-based Catholicos.  The Armenian National Library 
pursues ties with Iran, having signed memoranda of 
understanding (MOUs) with the Iranian National Library and 
Archives.  According to HSBC Bank Chief Executive Officer 
Anthony Turner, Iran's Bank Mellat is active in Armenia, 
providing trade and commerce-related services primarily to 
Iranian customers, although HSBC is terminating its 
relationship with Bank Mellat.  Travel to the northern 
ports-of-entry revealed light Iranian vehicle traffic.  End 
Summary. 
 
Armenian Foreign Policy Analysts on Iran's Nuclear Program 
--------------------------------------------- ------------- 
 
¶4.  (C) A range of foreign policy analysts and academics 
argued that there was little the U.S. could do to stop Iran 
from developing a nuclear weapon.  According to Dr. David 
Shahnazaryan, Head of the Concorde Centre for Political and 
Legal Studies head and former Armenian Minister of National 
Security (Shahnazaryan is also a co-founding member of the 
Armenian National Movement party), the Iranian leadership is 
intent upon developing a nuclear weapons program and there is 
seemingly little the U.S. can do to stop this.  Saying that 
Iran's economy is not sufficiently weak enough to force the 
Tehran regime to change its foreign policy direction, 
Shahnazaryan posited that the U.S. needed a strategic policy 
- not a tactical policy - to deal with Iran.  According to 
Shahnazaryan, a military attack on Iran by the U.S. "was not 
wise" because while the U.S. would be militarily successful, 
"enormous political problems would follow."  As direct talks 
between the U.S. and Iran seem unlikely, Shahnazaryan 
suggested that the U.S. consider employing a mediator with 
which to engage Iran.  Pointing to French President Sarkozy's 
strong speech at the UN, Shahnazaryan suggested that Sarkozy 
would be an "effective" interlocutor, effective both in 
negotiations with Iran and in winning over EU public opinion 
on Iran. 
 
¶5.  (C) Concerning the Armenia-Iran relationship and Iranian 
interests in the Caucasus, Shahnazaryan said that he did not 
like Armenia's political and security relations with Iran. 
Shahnazaryan believes that Iran benefits from the status quo 
in all Caucasus conflicts, and particularly the 
Nagorno-Karabakh.  According to Shahnazaryan, Iran is 
interested in keeping Azerbaijan focused on the unresolved 
Nagorno-Karabakh conflict because of Iran's insecurities 
about the ethnic Azeri issue in northwestern Iran. 
Reiterating his concern that relations between Armenia and 
Iran are not limited to the economic/commercial sphere, 
Shahnazaryan suggested that both countries enjoyed "high 
security and political relations."  With regard to other 
regional actors, Shahnazaryan said that regional conflicts 
and Iran's confrontation with the West were in Russia's 
interest as well because they contributed to higher commodity 
prices and a "desire to frustrate U.S. foreign policy 
efforts."  Shahnazaryan suggested that Turkey was driven by a 
goal to become an energy and pipeline hub for Europe, and 
that would affect Turkish foreign policy.  Noting that the 
possibility of an Iran/Russia/Turkey "energy axis" was being 
actively debated in Armenian foreign policy circles, 
Shahnazaryan suggested that this would be a danger for 
regional development.  (Comment:  Shahnazaryan's anti-regime 
biases may color his analysis, and indeed his presentation 
may be intended in part to pre-dispose U.S. policy toward the 
opposition.  He strongly implies that the opposition Armenian 
National Movement would be considerably more pro-American 
than the current Armenian government, particularly in its 
relations with Iran and Russia.  End Comment) 
 
Insights Into Iran From the Holy See at Echmiadzin 
--------------------------------------------- ----- 
 
¶6.  (C) Bishop Paren Avedikyan explained that although 
Armenians in Iran fall under the Holy See of Cilicia in 
Antilyas (Lebanon), not Echmiadzin, Armenians in Iran still 
look toward Echmiadzin for guidance because the Catholicos of 
All Armenians (in Echmiadzin) claims seniority over the 
Catholicos of Cilicia.  (Note:  The Armenian Church has been 
divided into the rival Echmiadzin and Cilician Catholicosates 
since the fifteenth century, though in modern times relations 
between the two have been relatively benign.  End Note).  As 
such, many Iranian Armenians pay their respects to Echmiadzin 
- the fourth century birthplace of the Armenian Church - when 
visiting Armenia.  The Echmiadzin Catholicosate thereby gains 
regular insights into the life of the Armenian community in 
Iran.  According to Avedikyan fewer than 100,000 to 150,000 
Armenians remain in Iran, less than half of official Armenian 
and Iranian government estimates (reftel).  Avedikyan 
reported that Armenians in Iran leave primarily for two 
reasons: economic and legal, with most fleeing Iran's 
deteriorating economic situation and seeking better 
opportunities elsewhere.  Legal issues affecting members of 
all of Iran's officially-recognized religious minority 
communities (Armenians, Jews, and Zoroastrian) also are a 
problem, according the Avedikyan explaining as example the 
legal stipulation that should a member of any religious 
minority convert to Islam, then the entire family's 
inheritance becomes the legal property of the new convert to 
Islam. 
 
¶7.  (C) Within Iran, Avedikyan reports that the Armenian 
church has three dioceses centered around Esfahan and Tehran, 
and is led by a Tehran-based Archbishop.  Characterizing 
relations with the Armenian Church in Iran as "amicable," 
Avedikyan claims that reattachment to the Mother See of 
Echmiadzin is an interest of many Armenians in Iran. 
Suggesting that the Iranian regime is not ignorant of this 
split, Avedikyan speculated that "Antilyas is probably 
cooperating with the Iranian government" and that Iran is 
probably "using it for its own purposes" (e.g., Iran wants to 
showcase its treatment of its religious minorities for public 
relations purposes). 
 
Expanding Cultural Ties with Iran 
--------------------------------- 
 
¶8.  (C) Providing an overview of Armenia's long-standing 
cultural ties and relations with Iran (the first 
Armenian-language printing press was reportedly located in 
Esfahan), Armenian National Library Head Davit Sargisyan said 
that his library had signed memoranda of understanding (MOUs) 
with the Shiraz Regional Library for Science and Technology 
and the Iranian National Library and Archives.  Saying that 
the Armenian side was motivated by a strong interest to 
"locate Armenian objects in Iran due to many migrations," 
Sargisyan said that the Iranian side appeared motivated by a 
desire to gain access to Persian scripts in Armenian 
libraries.  According to Sargisyan participants and hosts 
bore the costs for these exchanges, with participants paying 
for transportation expenses and hosts providing 
accommodation.  Sargisyan said that the MOUs also envisaged 
full access to archives and databases, the details of this 
arrangement still to be worked out. 
 
¶9.  (C) Speaking about his most recent visit to Iran in the 
summer of 2007, Sargisyan said that April 24 "genocide" 
remembrance protests in Iran had been banned, something that 
had been allowed back to Khomeini's time.  That said, 
Sargisyan said that Armenian art and culture are on exhibit 
in a variety of museums, that Armenian-language papers and 
books are still published, and that there are 13 active 
Armenian churches in Esfahan alone.  He said that many 
Armenians were emigrating to the U.S., Europe, and Australia, 
primarily for economic reasons.  In Tehran, Sargisyan said 
that the Ararat Community Center enables members of the 
Armenian community to meet without the usual outside 
restrictions, with men and women allowed to meet, smoke, and 
no covering of women's hair.  Sargisyan said that he admired 
the great amount of attention Iran pays to historical and 
cultural matters, making considerable investments in its new 
national library and Iranian Studies center. 
 
A Banker's View 
--------------- 
 
¶10.  (C) According to HSBC Bank Chief Executive Officer 
Anthony Turner, Iran's Bank Mellat is active in Armenia, 
providing trade and commerce-related services primarily to 
Iranian customers.  Characterizing Bank Mellat's Yerevan 
footprint as "small," Turner said that it was "respectable" 
and run by a "professional manager."  Turner told Iran 
Watcher he had received instructions from London to cease all 
business relationships with Bank Mellat, and that he would be 
closing Bank Mellat's account with HSBC shortly.  Concerning 
the Armenian Central Bank, Turner characterized it as 
"well-developed," operating with "sound regulations."  He 
said that the Financial Intelligence Unit (FIU) was 
established within the Central Bank by Armenian legislation. 
Turner said that the Central Bank took its Anti-Money 
Laundering (AML) and Counter-terrorism Financing (CFT) 
obligations "seriously," with suspicious activity reports 
(SARS) having criteria-driven requirements such as mandatory 
reporting for all transactions in excess of 20 million Dram 
(approximately USD 55,000).  Concerning other foreign banks 
active in Armenia, Turner said that Russian and French banks 
were also major players, with Gazprom planning to establish 
an Armenian subsidiary bank, something Turner said was most 
likely associated with Gazprom's interest in building an oil 
refinery at Meghri. 
 
Survey of POEs with EXBS 
------------------------ 
 
¶11.  (C) Traveling to Armenia's northern ports-of-entry 
(POEs) on the Georgian border at Bagratashen (land and rail), 
Bavra (land), and Gogovan (land), Iran Watcher and Embassy 
Yerevan's EXBS Advisor observed portal monitors in operation 
at all ports.  Speaking with customs and border guard 
officials at each POE, Iran Watcher learned that Iranian 
vehicle traffic at Bavra and Gogovan was very limited, 
primarily privately-owned vehicle traffic in the summer 
months (reportedly Iranian Armenians going to Georgian Black 
Sea resorts for vacation).  At the principle northern POE of 
Bagratashen, Iran Watcher observed light Iranian truck 
traffic, associated primarily with commercial goods such as 
plastics bound for Georgia.  It appeared that some 
Iranian-plated trucks displayed the decal of a Yerevan-based 
shipping company.  Enroute to the Gogovan POE, Iran Watcher 
also observed the Iranian-financed windmill farm at Pushkin 
Pass (approximately 25-30 kilometers north of Vanadzor), 
where at least four windmills were visible from the road. 
According to EXBS Advisor, the air POEs of Zvartnots and 
Gyumri will be outfitted with portal monitors in 2008, with 
EXBS outfitting the Zvartnots POE with monitors and the 
European Union outfitting the Gyumri POE. 
 
Comment 
------- 
 
¶12.  (C) The Government of Azerbaijan (GOAJ) has repeatedly 
claimed that weapons of mass destruction (WMD) are smuggled 
into the Republic of Armenia (and beyond) across Iran's 
border with Armenian-controlled Azerbaijani territory.  While 
it is possible that WMDs are being smuggled across this 
border, it does not seem likely that these cargoes could then 
exit the Republic of Armenia without notice because all of 
Armenia's land and rail POEs are outfitted with portal 
monitors. 
DERSE