ArmInfo. Former head of the State Revenue Committee (SRC) of Armenia, PhD in Economics David Ananyan gave a preliminary assessment of the potential economic benefits for Armenia from the operation of the 'Trump Road.'
Recall that on August 8, Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev signed a seven-point joint 'peace declaration' in Washington. It provides for a joint appeal to the Organization for Security and Cooperation in Europe (OSCE) to terminate the OSCE Minsk process and related structures, as well as the creation of a transport corridor through Armenian territory that will connect Azerbaijan with its Nakhchivan exclave. The TRIPP (Trump Route for International Peace and Prosperity) project, a 42-km road in southern Armenia that will hand over management of the road to the United States for 99 years, according to experts, is capable of significantly changing the geopolitical situation in the South Caucasus.
As Ananyan notes, according to the technical format, the will be an elevated highway with possible railway elements that will pass through the territory of Armenia and will function as a closed, controlled transport corridor. Its main geopolitical goal is to connect the continental territory of Azerbaijan with its exclave of Nakhichevan, bypassing the restrictions of Armenia's internal political control.
From a legal point of view, he notes, the road will be located on the sovereign territory of Armenia, but the exclusive right to manage and operate it will be granted to the Armenia/USA consortium with the right to operate it for 99 years. The project will operate within the framework of the legislation of the Republic of Armenia, but with obligations stipulated by the international treaty.
"For Armenia, 'Trump Road' clearly contains political and legal risks and restrictions, the in-depth analysis of which we will leave to political scientists and specialists in international law. For now, we will try to give a preliminary economic assessment of the potential economic benefits for Armenia from the operation of this infrastructure (the analysis is incomplete due to limited information)," the economist noted.
The economic assessment is based on the following assumptions: 1. Length and capacity of the route. The length of the Zangezur elevated highway is estimated at approximately 43 km (27 miles). Initial cargo volume: 8-10 million tons per year, according to some sources up to 15 million tons per year, and in the long term - up to 20 million tons per year. The calculations assume 15 million tons per year. 2.
Structure of transit fees. Since, according to available data, the highway will not be integrated with the internal road or economic infrastructure of the Republic of Armenia, Armenia's direct revenues will be formed only through transit fees and the share of revenues fixed for Armenia in the agreement. The latter indicator has not been officially published, therefore the calculation was made using a scenario method based on the experience of global PPP (public-private partnership) projects. In our calculation, the share of the Republic of Armenia was assumed to be 35%. 3. International tariffs. The average toll for heavy-duty vehicles in Europe is about 0.15-0.18 EUR/km/VH, while in Kazakhstan and other EAEU countries it is 0.01-0.05 USD/km/VH. In terms of a ton-kilometer tariff, this is 0.005-0.02 USD/t/km. The maximum value of this range was adopted in the calculations: 0.02 USD/t/km. 4. Average load of one truck. A conservative approach with a load index of 18 tons/VH was adopted in the calculations. When transporting 15 million tons of cargo per year, the average daily flow will be about 2,280 trucks, or 50-95 vehicles per hour (in two-way calculations). Using the formula for calculating the direct income of the Republic of Armenia for one year (E? = Tariff (tons/km) ? Route length (km) ? Annual volume (tons) ? RA share (%), the calculation will be as follows: 0.02 ? 43 ? 15,000,000 ? 35% = 4.52 million US dollars/year.
Thus, if the highway is not integrated with the internal economic systems of Armenia (stops, logistics hubs, fuel/service, warehouses, customs services), then the expected direct economic benefit for Armenia from transit fees alone will be very limited, about 4.5 million US dollars/year (depending on the length, tariff, share and flow).
And in the case of the theoretically maximum scenario (if the flow is 20 million tons/year, and Armenia's share is 100%), the direct economic benefit for Armenia will be 17.2 million US dollars/year (0.02 ? 43 ? 20,000,000 ? 100% = $17.2).
