Armenia proposes transferring national rail concession from Russia to third-party partner to boost competitiveness

Armenian PM Nikol Pashinyan proposes transferring the nation's rail concession from Russia to a third party like Kazakhstan or the UAE to restore competitiveness.

By: AXL Media

Published: Mar 5, 2026, 7:26 AM EST

Source: The information in this article was sourced from International Railway Journal

The decline of South Caucasus Railway (SCR)

Since 2008, Armenia’s rail network has been managed by South Caucasus Railway (SCR), a wholly-owned subsidiary of Russian Railways, under a 30-year concession. However, local reports indicate that the partnership has struggled to maintain the network's efficiency. During this tenure, freight turnover has halved, several critical routes have been shuttered, and significant investment commitments remain unfulfilled. Prime Minister Pashinyan argues that these "competitive losses" have made international partners increasingly reluctant to engage with Armenia’s rail sector, fearing entanglement with the Russian operator.

Strategic proposal for a third-party buyout

To resolve the stagnation, Pashinyan has proposed a diplomatic exit for Russia. He suggests that a country with friendly relations with both Yerevan and Moscow—such as Kazakhstan, the United Arab Emirates, or Qatar—should purchase the remaining 12 years of the concession rights. This move is framed not as an act against Russia, but as a necessary economic pivot to restore investor confidence. By introducing a new operator, Armenia hopes to integrate its rail system into broader international logistics networks that are currently avoiding Russian-managed infrastructure.

Russian resistance and warnings of collapse

Russian officials have met the proposal with sharp skepticism. Former Defense Minister Sergey Shoigu described the idea as "poorly thought-out," highlighting that Russia has invested approximately 30 billion Roubles (400 million USD) into the system over the last two decades. Moscow warns that removing Russian management could lead to the total collapse of the Armenian railway system, which they argue has been sustained largely through Russian technical and financial support.