Economist: It`s too early to assess economic benefits of new freight  routes passing through Armenia

ArmInfo. It's too early to assess the economic benefits of the Trump route (TRIPP) or of  grain supplies to Armenia through Azerbaijan, according to economist  Ashot Farsyan, a member of the "In Our Way" movement.

Speaking about the effectiveness of the TRIPP route through Syunik (a  42-kilometer road in southern Armenia, the management of which will  be transferred to a US management company for 99 years - Ed.),  Farsyan expressed confidence that from a purely economic perspective,  its impact on the Armenian economy will be insignificant. To support  his assertion, he noted that Azerbaijan has already announced plans  to transport 5 million tons of freight per year along this route.  Farsyan suggested considering the route's profitability based on its  ability to transport 10 million tons.

"Even in this case, the economic impact will be modest, given that  the route is only 40 km long. To estimate Armenia's potential income  from this route, one can compare it to freight transport through  Georgia to Russia, where Armenia pays $6 per ton. Thus, at a rate of  $6 per ton, revenue could range from $30 to $60 million. This is not  an amount that could significantly impact the country's economy," the  expert clarified.

Farsyan noted that Armenian authorities are trying to create the  impression that this route will become part of the so-called Middle  Corridor, which will transport freight from the Greater East to the  West. "However, given the geographic features and the presence of the  Caspian Sea with its port issues, this seems unlikely.  For instance,  the Kazakh port of Atyrau has already reached the threshold of  bankruptcy (due to the shallowing of the Ural River estuary - Ed.),"  the economist said.

On the occasion of the first grain shipment arriving to Armenia via  Azerbaijan, Farsyan noted that alternative transportation routes are  always beneficial. However, he also pointed out that the current  media coverage surrounding this shipment has been somewhat  exaggerated. "It's unclear which route is being used: through Russia  and Georgia or via the Caspian Sea. The price issue also remains  open: although it is claimed that Kazakh grain is cheaper than  Russian grain, there is no actual data for comparison," the economist  noted.

Farsyan pointed out that the price of bread in Armenia is currently  20% higher than in Georgia and Azerbaijan. "However, it's important  to keep in mind that bread accounts for a small share of the consumer  basket, and this 20% is determined by more than just the price of  grain. The price of wheat accounts for only 50% of the price of  bread, excluding transportation costs, electricity, and labor.  Therefore, it's premature to claim that the new route will lead to  lower prices for bread and other goods. It seems that the deliveries  are being made more to demonstrate that the roads are being  unblocked," the expert emphasized.

Farsyan also addressed security issues, pointing out that no risk  assessment has been conducted yet. He clarified that these risks can  vary, as security is not only about military threats. The member of  the "In Our Way" movement found it difficult to determine the real  economic impact of unblocking the roads, but expressed confidence  that there would still be risks involved. "Currently, no studies have  been conducted on these issues, and it would be appropriate for the  authorities to focus specifically on these issues," Farsyan  concluded.