President of Iran Mahmoud Ahmadinejad paid a visit to Armenia and voiced several agreements to uphold economic ties between the two nations.
Ahmadinejad and Robert Kocharian, his Armenian counterpart, announced plans to build a railway link and two hydro-electric power plants on the border river, Araks.
The agreements are important for landlocked Armenia, which has struggled with power shortages and transport blockades since the collapse of the Soviet Union. Neighboring Azerbaijan and Turkey have shut their borders with Armenia in the wake of a conflict over Nagorno-Karabakh, a breakaway region of Azerbaijan controlled by ethnic Armenians.
"We had very good talks that will help the development of infrastructure between our nations," Ahmadinejad said after the agreements were signed. "There are good prospects for a constructive cooperation to the benefit of the regional security."
The two presidents said that construction of the railroad, which would give Armenia long-sought access to the Persian Gulf, could begin next year after a technical survey.
Earlier this month, Iran opened its borders to Armenian trucks transporting goods to Iranian ports on the Caspian Sea, a more direct route for goods destined for Central Asia or southern Russia than the alternative route through Georgia.
Kocharian was Ahmadinejad's guest last year in Tehran, and in March the two presidents formally opened the first Armenian section of a natural gas pipeline between the two countries.
"We seriously intend to develop joint oil and gas projects," Kocharian said Monday.
On Tuesday, the Iranian leader was also to step into the controversy over the World War I-era killing of Armenians by Ottoman Turks by laying a wreath at the memorial complex commemorating the victims.
Scholars view the killing of 1.5 million Armenians, who are Christians, as the first genocide of the 20th century. But an attempt in the United States to recognize the killings as genocide has angered Turkey, which says the toll has been inflated and that those killed were victims of civil war and unrest.
Ahmadinejad has caused outrage by suggesting that the Holocaust is a "myth" invented by Jews. An estimated 6 million Jews were killed in what most consider to be the worst genocide of the 20th century.