This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 04 YEREVAN 000857 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR EUR/CACEN, EUR/ACE 
 
E.O. 12958: N/A 
TAGS: ECON KHDP PHUM PGOV PREF ETRD AM IR
SUBJECT: ARMENIA'S SOUTHERN PROVINCE:  DEAD END? 
 
¶1. (U) This cable is sensitive but unclassified. 
Please protect accordingly. 
 
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SUMMARY 
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¶2. (SBU) Armenia's Southern region of Syunik is a 
narrow swath of remote mountainous land, bound by the 
closed historical borders with Azerbaijan to the East 
and West, and stretching South to a 40 km wide border 
with an equally remote region of Iran.  Syunik's 
winding mountain road and hard winter weather create a 
natural obstacle for trade; its border with Iran feels 
more like a dead-end than a crossroads.  Human poverty 
-- measured by lack of access to clean water, 
electricity and education -- is higher than elsewhere 
as Syunik has failed to capture the benefits of 
Armenia's recent growth.  Still burdened by land mines 
and refugees, Syunik region's isolation and poverty 
are a bleak reminder of Armenia's bifurcated 
development:  as Yerevan grows the regions stagnate, 
having a more difficult time overcoming the effects of 
the Karabakh war and their (and Armenia's) geographic 
and political isolation.  End Summary. 
 
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THE HIGH ROAD SOUTH 
------------------- 
 
¶3. (SBU) The road to Armenia's remote Syunik region 
and on to Iran winds through Syunik's three high 
mountain passes, the Sisian (2345 meters), the Vorotan 
(2344 meters), and the Tashtun (2400 meters), which 
separate Syunik's four primary cities.  Perilous in 
fair weather, the road was still burdened by heavy 
snowfall when we traveled it the last week of March 
and was hit hard by a snowstorm as late as May 3. 
There is little traffic besides the occasional truck 
from Iran or trucks carrying ore from the copper 
molybdenum plants high in the mountains by the Kajaran 
pass.  When we passed, a wreck involving a 22-ton 
Iranian lorry had lain uncleared for several days, 
blocking a lane of traffic. 
 
--------------------------------------------- --------- 
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IRAN - ARMENIA BORDER:  MORE A DEAD-END THAN A 
CROSSROADS 
--------------------------------------------- --------- 
--- 
 
¶4. (SBU) The great surprise of the Syunik region is 
how little its proximity to Iran affects it. 
"'Proximity' is not a word we use when talking about 
Syunik," quipped the Deputy Marzpet (Governor). 
Despite being one of Armenia's two open borders, trade 
with Iran is oddly slow.  According to the Armenian 
Department for Migration and Refugees, on average 
fewer than 1,000 people cross the border each month(in 
both directions).  In December 2004, their statistics 
show three hundred crossing into Armenia and 300 
crossing out.  At the border there are few stores 
catering to Persian drivers (or any drivers, for that 
matter) and the duty-free border market that lies in 
between the two customs houses was nearly still: we 
counted 3 people wondering among the metal stalls. 
(Note:  By contrast the border market at the Georgian 
- Armenian border is a busy place, with hundreds of 
vendors selling a broad range of goods and lines of 
merchants hauling teaming carts of duty-free goods 
across the customs point.  End Note.) 
 
¶5. (SBU) The mayor (and former customs official) of 
the border village Agharak complained that besides the 
duty-free markets between the customs points, any 
goods from Iran must be taken to the regional customs 
clearing house in Sissian, 166 km and three mountain 
passes away.  Iranian goods are thus more expensive in 
the border town than they are in the capital Yerevan, 
410 km away. 
 
--------------------- 
NORTH-SOUTH CORRIDOR? 
--------------------- 
 
¶6. (SBU) The Marzpet and an official from the Ministry 
of Transport and Communication expressed frustration 
about the difficulty of reestablishing the North-South 
trade corridor that traditionally ran from Iran to 
Yerevan.  Once the region's main North-South highway, 
the Soviet road and railroad ran through the border 
towns of Meghri and Agharak and then West of Syunik 
into the territory of Nakhchivan, Azerbaijan, through 
the low-lying Araxes valley, and back into Armenia 
more than 300 km north.  That route is now blocked by 
closed borders, and work has begun on a new "low road" 
from Iran through Syunik region that would avoid the 
mountain passes, but the government has not yet 
decided how or if it will finance the mountain 
tunnels.  While the Ministry of Transport and 
Communication told us that they are considering a 
feasibility study of laying rail from Yerevan to 
Syunik region then on into Iran (in response to 
Azerbaijan's recent efforts to connect its railway 
with Iran's) they acknowledge that the overwhelming 
distance and extreme terrain make building a railway 
prohibitively expensive. 
 
¶7. (SBU) According to Syunik Marzpet and his deputy, 
the region is taking steps to increase its trade with 
Iran, but things are developing slowly.  He commented 
that the marz has looked to Iran as a market for its 
local produce which is easier to transport to Northern 
Iran than to Armenia's capital.  But he said that the 
lack of traditional trading ties and cultural 
differences are an impediment to trade.  "Iranians are 
difficult to do business with," he said, adding that 
the nature of bargaining was different that even the 
systems of payments caused difficulties.  (There is no 
commercial bank in Agharak, the border town of 4,000 
people, and one commercial Armenian bank in the 
nearest town Meghri.)  He added, "As remote as we are 
from the rest of Armenia, the neighboring part of Iran 
is even more remote from its capital." 
 
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ECONOMIC GROWTH BYPASSES REMOTE REGIONS 
--------------------------------------- 
 
¶8. (SBU) While construction and trade drive double- 
digit growth for Armenia's urban areas, the benefits 
of economic growth have bypassed Armenia's remote 
rural regions like those in Syunik.  Two foreign owned 
copper-molybdenum mines, from which nearly all the 
proceeds go directly abroad or to the capital, employ 
4,500 of Syunik's 164,000 residents and account for 90 
percent of Syunik region's economic output.  Small 
hydro-electric plants that generate electricity for 
the region account for another 6 percent of the 
region's output, which is to say that there is little 
other business to speak of.  The Soviet-era 
electronics factories that once powered Southern 
Armenia's economy are now defunct, giving Syunik 
Armenia's highest rate of unemployment.  The Meghri 
cannery, Syunik's ninth largest business, appeared 
empty and idle when we visited on a Wednesday at noon. 
In the towns of Goris, Kapan and Meghri, the only 
small or medium sized businesses in sight are 
bookmaking parlors where residents place bets (usually 
around USD 10) on European soccer matches. 
 
¶9. (SBU) Besides Syunik's four towns, Syunik's 
villages are either high in the mountains or scattered 
along the old Azerbaijani border region that was 
heavily damaged by artillery shelling during the war. 
Most families rely on simple agriculture, although 
their agricultural inheritance is weak.  Roads are 
poor, and farmers cannot easily take their produce to 
market.  Many villages must bring clean drinking water 
from wells in other villages.  Basic fixed or mobile 
telephone service is dodgy.  The electricity supply is 
sporadic and there is no natural gas.  Villagers still 
heap separate piles of dried dung for fuel and straw 
for animal feed outside the front doors to see them 
through the winter. 
 
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STILL WOUNDED BY THE WAR 
------------------------ 
 
¶10. (SBU) Syunik Marz suffered heavily during the 
military conflict with Azerbaijan.  During the initial 
stages of hostilities, Syunik's border with Azerbaijan 
was the front line of the conflict.  Nearly all towns 
and cities in the province came under intense 
artillery shelling (and some aerial bombardment), and 
many buildings remain pockmarked with shrapnel. 
Syunik's roads are still badly damaged from wartime 
bombings and military uses.  Although Armenia occupies 
the territory on the other side of the historical 
border with Azerbaijan, both the Azeri side and the 
adjacent areas of Syunik remain heavily mined.  The 
mines have presented an obvious obstacle to the 
settlement of the occupied territories by Armenians. 
Syunik residents told us that while the GOAM has not 
discouraged them from farming or grazing in these 
territories, any such move would be infeasible and 
certainly deadly with the large amount of ordnance 
currently underground. 
 
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DE-MINING PROGRAM DORMANT 
------------------------- 
 
¶11. (SBU) Named for an 18th century rebel leader 
against Persian rule, the village of David Bek was an 
initial focus of demining efforts in Armenia.  From 
his office in the center of the village, David Bek's 
mayor pointed out a small hill rising approximately 
half a mile distant as the border between Armenia and 
Azerbaijan.  Most of the surrounding countryside 
remains uncultivated due to the heavy concentration of 
mines, primarily large Soviet anti-tank mines laid by 
Armenian forces in 1992. 
 
¶12. (SBU) During the summer of 2003, the first 
Armenian Army mine-clearing forces began clearing 
village land of the mines.  The effort was suspended 
last year, with focus shifting to other communities in 
Armenia despite the fact that only 15 percent of David 
Bek's mined land had been fully cleared.  In the past 
two years, only a few individuals who had purchased 
the farmland during a 1991 privatization push have 
been able to finally occupy their property.  The mines 
also continue to cause deaths and serious injuries in 
David Bek.  During its limited mine-clearing activity 
in the area, the Army did not undertake a survey of 
mine locations.  Consequently, citizens of David Bek 
still do not know the full scope of their mine 
problem.  The mayor told us that recently a mine had 
exploded underneath his car as he drove along a road 
thought to be clear; although his vehicle was 
destroyed, the mayor escaped with minor injuries. 
 
----------------------------------- 
REFUGEES: FAILING TO MAKE NEW LIVES 
----------------------------------- 
 
¶13. (SBU) Refugees have also had a substantial effect 
on the population of Syunik.  Thousands of Armenians 
from Baku and other parts of Azerbaijan have re- 
settled in Syunik's hotels, dormitories and asylums. 
The village of Syunik, located 5 miles from the city 
of Kapan near the wreckage of a bright yellow 
Azerbaijani helicopter shot down in 1991 (which is 
something of a local monument), highlights the 
problems of refugee integration seen throughout the 
region.  Ninety-three refugee families live in Syunik 
village, and, unlike in many areas of Armenia, live 
intermingled with the local population.  Most of the 
refugees are from Baku, where they held jobs such as 
engineers, factory workers and ship-builders.  In the 
village, they have had to adapt to a primarily 
agricultural lifestyle, farming the limited amount of 
land and selling produce locally.  Such is the case 
for most refugees in Syunik Marz, whose technical 
expertise cannot be employed with the limited 
resources of the impoverished region.  The village 
administration has sought to employ a limited number 
of the refugees as Russian language teachers in the 
local schools, but is otherwise unable to find long 
term and viable employment for them. 
 
--------------------------------------------- ---- 
COMMENT:  ARMENIA'S GROWTH LEAVES OUT THE REGIONS 
--------------------------------------------- ---- 
 
¶14. (SBU) Armenia's most remote region, Syunik 
portrays Armenia's bifurcated development:  Yerevan 
grows and elsewhere the economy is stagnant. 
Armenia's double-digit growth has bypassed its 
regional cities.  While construction booms across 
central Yerevan, Syunik's capital Kapan looks like a 
quiet Soviet city, devoid of much that resembles 
employment.  Like Armenia's northern regions bordering 
Georgia, Syunik has failed to capitalize on its 
regional link to Iran in order to profit from transit 
or even local trade.  Like other border regions, 
Syunik has moved on more slowly from the war, and the 
people still consider the war, albeit proudly, as the 
source of their poverty.  Yerevan businessmen and 
Yerevan based ministries control the few valuable 
resources the region has, notably two copper plants 
and a single textile factory, and the region's hope 
for new investment is focused on new projects from 
Yerevan's public or private sector.  Perhaps most 
telling, it is the oligarch marzpet, appointed by the 
President, who wields power in the region, not the 
elected mayors of the cities and villages, who tend to 
be otherwise unemployed. 
EVANS