Source: Asia Development Bank
Armenia’s Crossroads of Peace initiative offers a vision of peace and stability through improved infrastructure and trade. It is also a great opportunity to build sustainable infrastructure, improve customs clearance, and promote green trade. Key reforms in road safety and foreign direct investment are essential for long-term success, positioning Armenia as a strategic hub for regional trade.
Armenia, located in the South Caucasus between Europe and Asia, holds a strategic geographic position as a natural crossroads for east-west and north-south trade routes.
Despite closed borders with neighbors to the east and west, Armenia has outlined a vision of open borders through its “Crossroads of Peace” initiative.
Supported by investments in road, rail, and border checkpoints, the initiative envisions economic ties and peaceful relations with all neighbors. While improved rail networks and modern roads are a key focus, the initiative must address several factors to ensure long-term success:
Make the infrastructure sustainable. The infrastructure investments under the initiative represent a remarkable opportunity to incorporate sustainable infrastructure. Doing so would set a standard for future developments in Armenia and position the country as an early adopter of sustainable infrastructure in the region.
This can be done through implementing green building standards in the roads, bridges, and related infrastructure, through the use of sustainable, recycled, or low-carbon materials along with enforcing emissions standards for equipment used in construction and maintenance.
LED streetlights, which last longer and reduce energy consumption, could be used. Border points can be built or refurbished to meet energy efficient standards and equipped with power supplied from renewable sources.
These interventions would limit the carbon footprint of the Crossroads initiative while, in the long run, reducing the overall costs for its implementation.
Streamline customs clearance processes. Freight typically follows the least time-consuming and cost-efficient way. While better roads and rail networks are attractive for transit trade, customs processes need to be streamlined to truly deliver on the desired objective.
Digitization is the backbone of modern logistics. For customs processes, it reduces paperwork, corruption, and can drastically cut border wait times. Armenia’s adoption of the Electronic International Road Transport system is a needed advancement that would immediately improve customs clearance efficiency.
As Armenia’s neighbors have adopted the system as well, its geographic position along with digitally integrated customs procedures would make it the natural choice for freight movement. And with much of the legal framework agreed and a gap analysis already prepared by the United Nations Economic Commission for Europe, this would seem to be low-hanging fruit on the list to improve logistics and promote regional trade.
Armenia is at a critical point in its development trajectory and the Crossroads initiative could be the mechanism to propel it into a regional hub for trade and logistics.
Promote Green Trade. The Crossroads initiative could be an enabler for Armenia to become an advocate for green trade to yield benefits to future generations.
This could be achieved through developing green logistics frameworks that incentivize low-emission transportation assets and eco-friendly packaging for goods.
Local campaigns to raise awareness of the benefits of green products and sustainable consumption can help instill these practices in Armenia, while eco-friendly labels on products can help consumers make smart choices when purchasing goods and services.
Armenia has already renewed its commitment to the Paris Agreement and the government has demonstrated it takes the climate agenda seriously. Promoting green trade will be another mark on the road to greater sustainability, competitiveness, export diversification, and generally improved value addition.
Become an enabling environment for foreign direct investment. With open borders the Crossroads initiative can attract greater foreign direct investment, which would have sweeping benefits including job creation, greater productivity, increased government revenue, human capital development, and general technological advancements.
The regional stability offered by the initiative could be the trigger that entices foreign investors to consider Armenia as a new frontier for opportunity.
Armenia has shown steady improvements in attracting new businesses, suggesting its legal and regulatory frameworks have become more attractive to foreign investors. However, Armenia faces stiff regional competition in the South Caucasus from Georgia and will need to accelerate these reforms to redirect investment in the region.
The creation of more special economic zones is an important lever for the government to attract investment. Given the integral nature of transport and logistics to the initiative, more zones designed to support better logistics and simplified trade would be a meaningful step to attract the right firms and needed capacity to execute on the increased demand the Crossroads will bring to the region.
Create a culture of road safety. With significant investments in road infrastructure, the Crossroads initiative will offer drivers smoother and faster road surfaces. However, without stronger measures to promote a culture of road safety and enforced safety laws, improved conditions could lead to an increase in accidents.
Armenia has taken positive steps enacting legislation that requires seat belts and motorcycle helmets, yet on the road it is common to see drivers without either. The legislation also does not specify restraints for child safety and children are allowed to be seated in the front, both drastically increasing the chances of injury or death in case of accident.
A coordinated countrywide awareness-raising campaign on the benefits of seat belts, helmets, and child restraints is necessary, along with legislative actions to identify standards and improve enforcement.
Armenia is at a critical point in its development trajectory and the Crossroads initiative could be the mechanism to propel it into a regional hub for trade and logistics. However, it should not only be framed around building roads, rail, and bridges. It should also deliver on its broader ambitions and create lasting benefits for society.