US reaches nuclear deal with Armenia as Vance pushes peace dividend

US-Armenia Nuclear Cooperation Agreement

By Lucy Papachristou

Details of the 123 Agreement

TBILISI, Feb 9 (Reuters) - Armenia and the United States agreed on Monday to cooperate in the civil nuclear sector as Washington sought to bolster ties with a former close ally of Russia, months after Washington brokered a peace agreement in the South Caucasus.

Implications for Regional Energy

A statement on the nuclear sector deal was signed by Armenian Prime Minister Nikol Pashinyan and U.S. Vice President JD Vance, who is on a two-day visit to the country.

Vance's Peace Initiatives

The two said they had completed negotiations on what is known as a 123 Agreement, which allows the U.S. to legally license nuclear technology and equipment to other countries.

The agreement will allow up to $5 billion in initial U.S. exports to Armenia, plus an additional $4 billion in longer-term fuel and maintenance contracts, Vance said.

"This agreement will open a new chapter in the deepening energy partnership between Armenia and the United States," Pashinyan said at a joint press conference with Vance.

Long heavily dependent on Russia and Iran for its energy supplies, Armenia is now reviewing proposals from U.S., Russian, Chinese, French and South Korean companies to construct a new nuclear reactor to replace its sole, ageing Russian-built nuclear power plant, Metsamor.

No choice has yet been made, but Monday's announcement paves the way for an American project to be selected. That would deal a blow to Russia, which traditionally has viewed the South Caucasus as its sphere of influence but whose clout there has diminished as a result of its invasion of Ukraine.

'DIVERSIFY PARTNERS'

"Considering Armenia's multiplicity of dependencies on Russia, it is a political priority to diversify partners when it comes to nuclear cooperation," said Narek Sukiasyan, a political scientist in Yerevan.

"The United States seems to be the preference now."

Vance's visit comes just six months after the Armenian and Azerbaijani leaders signed an agreement at the White House seen as the first step towards peace after nearly 40 years of war.

Vance was also seeking to advance the "Trump Route for International Peace and Prosperity (TRIPP)", a proposed 43-kilometre (27-mile) corridor that would run across southern Armenia and give Azerbaijan a direct route to its exclave of Nakhchivan and in turn to Turkey, Baku's close ally.

The route would better connect Asia to Europe while - crucially for Washington - bypassing Russia and Iran at a time when Western countries are keen on diversifying energy and trade routes away from Russia due to the Ukraine conflict.

The TRIPP corridor, which envisages new or updated rail infrastructure, oil and gas pipelines and fibre-optic cables, would transform the South Caucasus, a region riven by closed borders and longstanding ethnic conflicts.

"We're not just making peace for Armenia," Vance said. "We're also creating real prosperity for Armenia and the United States together."

He is set to visit Azerbaijan on Wednesday and Thursday, according to the White House.

(Reporting by Lucy Papachristou in Tbilisi; additional reporting by Steve Holland in Washington; editing by Gareth Jones and Mark Heinrich)