Hasmik Petrosyan is a 59-year-old Armenian primary school teacher living in the village of Shirakavan, which borders Turkey’s Kars province. With hospitality similar to her Turkish neighbors, she explains what life is like in her village as she invited a group of mostly Turkish visitors to her humble home filled with her warmth. “The economy is very bad here. There is no water to drink, no water for agriculture. The village has no gas. There is no infrastructure. Before 1993, the situation was much better.” She’s referring to the severed diplomatic ties between Armenia and Turkey, which closed its border in 1993 in protest of the Armenian occupation of Nagorno-Karabakh in Azerbaijan. The closure of the border has devastated the Armenian economy because the country is dependent on other countries for energy supplies and most raw materials.

As the only breadwinner at home, Petrosyan earns about $200; her bedridden husband gets $60 in pension a month. Her grown son and daughter cannot find work. But there is hope in her striking green eyes that things are going to get better, and her gloomy expression changes to a wide smile when she says, “We will smile when the border opens.”

Even in Yerevan, there are homes without gas and running water behind the brightness of Western-style shops and brand names lining some of the main streets of the capital. Petrosyan represents most Armenians, who believe that the economy will get better once the border is opened as Turkey and Armenia give positive signs that relations will improve.

In Istanbul on Monday, Armenian Foreign Minister Edward Nalbandian described the ongoing talks as "very positive and sincere." Before a meeting with Turkish Foreign Minister Ali Babacan, he said that by normalization, he meant the opening of the border and the restoration of diplomatic relations.

"Armenia is ready to establish bilateral relations without any preconditions, and we are expecting the same from the Turkish side," Nalbandian said. "This is not a favor. It is in the interest of Turkey to open the border, and this is in the interest of Armenia." Land routes through Georgia and Iran are inadequate or unreliable for landlocked Armenia, which is forced to pay higher transit costs because of the closed border with Turkey, as 25 percent of Armenia's imports are from Turkey. Even though the Turkish province of Kars is 20 kilometers away, it takes at least 14 hours for a truck to reach Armenia through Georgia, increasing the costs for Armenia by at least 20 percent. "It will mean economic activity for both sides and greater access to markets," said Richard Giragosian, an independent analyst who moved from the United States to Armenia about two years ago.

The trade volume between the two countries is $65 million even with closed borders. For Turkey, opening the border will be more important politically than economically. "Turkey is an important energy hub, and it can expand that significance as a regional transit hub if the border is opened. It is also in line with Turkey's policies to engage in good relations with its neighbors," Giragosian said, adding that an open border would also benefit the Kurdish dominated regions economically.

Armenia has mines and rock and some construction materials for export. It mostly buys textiles and agricultural products from Turkey.

Armenian economy has improved following the 1994 cease-fire in Nagorno-Karabakh. New sectors, such as precious stone processing and jewelry making, information and communication technology and tourism have begun to supplement more traditional sectors such as agriculture.

Giragosian said the World Bank predicts an optimistic 10 percent rise in the gross domestic product (GDP), assuming that opening the border with Azerbaijan will follow, but several economists predict a more realistic 3 percent to 4 percent increase. Similar to other newly independent states of the former Soviet Union, Armenia is struggling to make the transition from communism to a market economy. Its old Soviet trading partners are gone, and Russian investors have taken their place. Professor Tatoul Manasserian from Yerevan State University said dependence on Russia is a threat for Armenia.

"Take out Russia, you don't have any foreign direct investment," he said. "Dependency is a growing threat to Armenia. An open border will lower risks for other investors." He also said the Armenian government needs to create an environment favorable for investors because opening the border will be a shock to the Armenian system in which oligarchs are established to exploit.

"Many of the oligarchs are in the parliament. In the ruling Republican Party, there may be 10 deputies who are not oligarchs," Manasserian said. There may be more forces in Armenia who would oppose opening the border with Turkey.

Giragosian explained that in addition to the oligarchs, there are nationalists, the Armenian diaspora, who press for the Turkish recognition of the Armenian genocide, and the Armenian military, which used the closed borders to exaggerate the defense spending by depicting Turkey as a threat.

Then why is the Armenian government ready to open the border when there are influential forces for the continuation of the status quo? Giragosian said it's because public opinion is in favor of opening the border. Moreover, a Dashnak party (Armenian Revolutionary Federation or Dashnaktsutyun), currently a governing coalition member known for its nationalist stance, did not oppose the government's rapprochement with Turkey.

Manasserian is hopeful that Armenian President Serzh Sarksyan and Prime Minister Tigran Sarksyan can prepare the country for change because they are more flexible compared with former leaders.

"The most important thing is that Turkey and Armenia are talking to each other, have direct relations. Their talks are not mediated by others," he added. Serzh Sarksyan will visit Turkey in October 2009 to watch a game between the national soccer teams of the two countries, reciprocating a similar visit by Turkish President Abdullah Gul in September.

Turkish-Armenian relations have gained momentum after a regional crisis erupted following a Georgian military offensive in its Russian-backed breakaway region of South Ossetia. Ankara came up with a proposal to prevent future disputes. The Turkish government promoted an initiative called the Caucasus Stability and Cooperation Platform, supported by visits to Moscow, Tbilisi and Baku. Armenia also backed the idea.

Observers agree that the Caucasus stability initiative made Turkey directly engage with Armenia. The two sides have been secretly negotiating for the past two years.