How to Power Armenia's Economy?

By Jennifer Gnana

Armenia could witness another Chernobyl if it didn't resolve security concerns surrounding one of its oldest nuclear plants.

The Metasmor plant which lies along a fault-line on the closed Armenian-Azerbaijani border is proving to be a gamble of sorts.

Not only is the area seismically active, it is also fraught with diplomatic and security concerns as relations with Baku have been frosty for ages, as the latter has normally sided with arch-foe Turkey, refused to recognise the Armenian genocide and have also in the past conducted pogroms against its Armenian population.

Similar to the concerns raised in the Indian nuclear plants at Jaitapur and Kudankulam, following the nuclear meltdown at the Fukushima Daiichi nuclear plant in Japan last year, the anxiety over Metasmor has only increased in intensity.

Concerns have been raised as Armenia has suffered most painfully from past earthquakes.

An earthquake in the Spitak region in the country's north killed 25,000 people in 1988 and levelled most standing structures in the region.

Fears of another devastating quake are naturally on the minds of the people as the previous disaster required $3.5billion in aid to rebuild.

While the rest of Europe has chosen to act upon the Japanese disaster by focussing more on alternative forms of energy, Armenia is not part of the change.

Germany stated early last year that it will decommission its plants by 2020 and will depend on alternative energy sources to power its economy.

Armenia on the other hand, is likely to commission yet another nuclear power plant in 2017.

The Metasmor plant is fraught with danger according to some as it not only lacks a containment vessel but it is also situated a mere 75km away from the epicentre of the Spitak earthquake.

The Russian-engineered plant is not considered safe by Azerbaijan and other countries in the region.

What they would like to avoid is another former Soviet republic experiencing a cataclysmic nuclear disaster like Ukraine did in 1986.

Armenia's energy needs hang in limbo as its friendly neighbour Iran has raised doubts over supply of oil through its oil pipelines in the Strait of Hormuz.

With the threat of sanctions on Iran looming large, Armenia's economy which took as beating in 2009 when its economy shrank by 15% due to recession, will be set for a further setback.

The country currently depends on gas-rich Russia and oil-rich Iran for its energy needs.

In a cause for further anxiety, Moody’s has downgraded Armenia's credit rating by a double notch and has added it to its watch list.

According to former Armenian foreign minister Vartan Oskanian, any recession or slowdown of the global economy can affect Armenia.

"The impact could be more direct on Armenia because European Union is Armenia's largest trading partner," he said in a recent interview with Al Jazeera's Counting the Cost programme.

Being a key trading partner to the EU and Russia as well as one of the few Iranian allies, it is in the interest of Armenia that it uses this unique position to press for negotiations and removal of possible sanctions against the Islamic republic.

Doing so will save Europe, the global economy and Armenia from further economic decline.