Iran and Armenia are entering a new phase of economic cooperation as Iranian President Masoud Pezeshkian prepares for a pivotal visit to Yerevan on Monday. The trip coincides with a strategic shift in regional transit dynamics, particularly following the Armenia-Azerbaijan transit agreement to construct the Zangezur corridor.

Initially met with caution, the corridor has evolved through diplomatic engagement into a platform for economic collaboration. PressTV says that the agreement complements Iran's broader North-South transit corridor ambitions, aimed at connecting the strategic Chabahar port to the Caucasus and beyond.

Iranian Foreign Minister Abbas Araghchi noted that shared history and mutual interests have placed Iran and Armenia "on the verge of a new chapter in their bilateral relations," while reaffirming Iran's dedication to fostering peace and stability in the South Caucasus.

Armenia's deputy foreign minister assured Tehran that all sovereignty and border concerns had been fully addressed. "In the declaration that we are speaking about, there is a reference to four very key principles of sovereignty, territorial integrity, jurisdiction, and reciprocity," the Armenian official told PressTV. "With this, I should say that the concerns that previously both Iran and Armenia had about the extraterritorial corridor are fully lifted," he added. 

The official also emphasized that the project remains strictly economic, "Basically, we are speaking about an economic project without any security involvement of the parties that may be of particular concern for our Iranian colleagues."

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A critical component is Iran's potential access to the Nakhchivan-Jolfa railway connection. "Using the Nakhchivan-Jolfa railway, Armenia and Iran can be connected with rail. And in this case, if Iran is connected with Armenia through rail, it basically is connected with Georgia and the Black Sea, which has new economic opportunities itself for Iran," the Armenian deputy foreign minister explained to PressTV.

Iran-Armenia trade growth and infrastructure collaboration

Economic ties between Iran and Armenia have shown consistent growth. Bilateral trade reached $737.4 million in 2024, a 6.5% increase over the previous year, making their goal of reaching $1 billion in trade by 2025 within reach.

Iran is currently Armenia's fourth-largest trading partner, contributing approximately 4.9% of Armenia's imports. This partnership includes sectors such as energy, with the Iran-Armenia gas pipeline, and infrastructure, highlighted by Iranian firms investing $215 million to upgrade the Agarak-Kajaran highway.

Strategic infrastructure integration

The full implementation of the Iran-EAEU (Eurasian Economic Union) Free Trade Agreement in May 2025 has further energized regional commerce. Under the agreement, average import tariffs have been slashed from 20% to 4.5%, and 87% of traded goods now benefit from tariff exemptions. This development has the potential to double regional trade to $12 billion.

Armenia's position as the only Eurasian Economic Union member bordering Iran gives it a unique logistical advantage. 

Both nations have expressed a shared commitment to regional development rooted in respect for sovereignty. Armenia's deputy foreign minister underlined to PressTV that "sovereignty and regional stability are at the core of this agreement," adding that it is ultimately "about economic opportunities."

For Iran, these developments represent a significant advancement, easing security concerns and creating avenues for deeper economic integration.  As President Pezeshkian prepares for his visit, both Iran and Armenia are poised to solidify gains made through recent agreements.