The fact that Iranian President Mahmoud Ahmadinejad cut short a visit to Armenia is not a reflection on the state of Armenian-Iranian relations, Armenian leaders say. Ahmadinejad's visit laid the groundwork for an expansion of economic relations, officials in Yerevan contend.

Ahmadinejad left Yerevan on October 23, almost a day ahead of schedule. Analysts attributed the abbreviated stay to domestic factors in Iran. Viktor Soghomonian, Armenian President Robert Kocharian's press secretary, said the early departure would not have a negative impact on bilateral ties.

"President Robert Kocharian and President Mahmoud Ahmadinejad managed to discuss all the issues on the agenda for the Armenian-Iranian talks," the Arminfo news agency quoted Soghomonian as saying. During the visit, the two presidents signed cooperation agreements covering banking and investments, as well as the development of a wind-power plant in Armenia. In addition, the two countries signed an accord to open consulates.

According to unconfirmed reports, Iran's Supreme Leader Ayatollah Ali Khamenei is seriously ill. If true, such a development could have prompted the Iranian president to cut short his Armenian stay. Other reports suggested that factional infighting in Tehran has intensified in the wake of the replacement of Ali Larijani as Iran's top nuclear negotiator with Saeed Jalil. The move is considered a political victory for the hardliner faction led by Ahmadinejad. Larijani was viewed as an independent player in Iranian politics, whereas Jalil has close ties to the president.

In Yerevan, Ahmadinejad and Armenian officials focused on strengthening economic relations. To date, the main bilateral achievement has been the construction of a natural gas pipeline connecting the two countries. The pipeline was officially inaugurated in March, when Ahmadinejad paid his first official visit to Armenia. Soon, a pipeline connecting the southern province of Suynik and the capital Yerevan will be completed. With the gas pipeline project behind them, Iran and Armenia are intent on exploring other energy and transit deals.

"We are talking now about an oil pipeline, and issues concerning railroads," Gegham Gharibjanian, Armenian deputy foreign minister told reporters on October 23. The sides are also mulling the construction of an oil refinery in southern Armenia. Russia would also be a participant in the project, in which Iranian crude would be processed at the Armenian facility. According to the Arminfo news agency, the refinery project is "now at the stage of technical and economic feasibility studies."

A refinery deal could have a cascade effect for bilateral economic ties. For example, it could provide a rationale for the construction of a new rail link between the two countries. The only existing railroad binding the two countries passes through the Azerbaijani territory of Nakhichevan, and it is thus inoperable due to the lack of a Nagorno-Karabakh peace settlement.

An October 22 statement signed by Ahmadinejad and Kocharian did not delve into details about bilateral economic and political cooperation, and instead focused on generalized statements concerning regional stability. In particular, it did not mention a possible free-trade agreement. During a visit in July, Iranian Foreign Minister Manucher Mottaki suggested that a free-trade pact could be ready for signing within two months.

The only concrete trade development was announced shortly before Ahmadinejad's arrival, as Iran decided to expand transit privileges for Armenian traders. According to an announcement by the Armenian Ministry of Transport and Communications, Armenian trucks will now have the right to transport goods across Iranian territory to Iranian ports at Bandar Abbas on the Persian Gulf and Enzeli on the Caspian Sea. Previously, Armenian entrepreneurs could ship goods across Iran only in Iranian vehicles.

Despite the lack of progress on a free-trade agreement during the Iranian president's visit, Grigor Kocharian, a top official at the Armenian Ministry of Trade and Economy, remained upbeat. He indicated that delegations from both countries would meet soon to discuss outstanding issues.