Iranian President Ebrahim Raisi signed a gas swap deal with his Azerbaijani counterpart Ilham Aliyev on the sidelines of the 28 November Economic Cooperation Organization (ECO) summit in Ashgabat, Turkmenistan. The timing of the deal and its geostrategic significance outweighs its economic impact for both sides. For Iran, in particular, it represents the first concrete result of the rapid overhaul of its regional posture in recent months.
The standoff and Iran’s hardline approach
The deal ended the October-November escalation between Iran and Azerbaijan, which has featured unprecedented Iranian war games on their shared borders and symbolic steps in challenging several of Baku’s regional interests unless it accounted for Tehran’s concerns.
In a 3 November analysis for The Cradle, this author described Iran’s conduct as the initiation of a new, more assertive posture in Eurasia. The aims of this new posture are to exert damage control over regional trends favorable to Iran’s adversaries and to establish the potency and credibility of Iran’s regional red lines.
In the South Caucasus, this means reversing Azerbaijan’s confidence in Israel as a positive contributor to its regional standing, and pressuring Baku to place its relationship with Tel Aviv on the bilateral negotiating table between itself and Iran.
From this point onward, Tehran can effectively wield the threat of challenging Azerbaijani regional interests as a bargaining chip to scale back Baku’s ties with Tel Aviv. Such challenges include taking steps to reroute the North South Transport Corridor (NSTC) from Azerbaijan to Armenia or stationing troops in Armenia’s south to deter the implementation of Azerbaijan’s prized Zangezur Corridor across that area.
The gas swap deal is Iran’s first inroad in this stratagem.
The gas swap deal de-escalation
According to the deal, Iran will receive Turkmen gas and then send an equivalent amount of Iranian gas to Azerbaijan.
By involving Iran in its regional trade as a means of defusing tensions, Azerbaijan validates Iran’s new hardline posture toward it through this key concession. Specifically, Azerbaijan acknowledges and assuages Iran’s heightened perception of threat in any moves toward crafting a regional economic and security order that does not include a tangible role for the Iranians.
Notably, since this perception of threat is derived almost entirely from Iran’s oft-enunciated view of any such moves as an extension of Israel’s global campaign to isolate it, the deal qualifies as a concession from Azerbaijan, even if indirect, on the issue of its ties with Israel.
From Iran’s perspective, this is a milestone of sorts for its new hard power approach to the region.
The gas deal represented Azerbaijan’s shift from its previously dismissive stance toward Iran’s Israel-centric criticisms of its policies in exchange for Iran winding down its aggressive military posturing on the border.
This serves to activate the bilateral bargaining arrangement Iran seeks.
Under the principle of reciprocity enshrined by such arrangements, any attempts by Baku to revert to its old practice of safeguarding its relations with Tel Aviv from Iranian scrutiny may be met by Tehran’s return to an aggressive posture.
As a result, Azerbaijan would find a mounting set of new challenges at its doorstep, a year after its historic victory over Armenia in the second Nagorno-Karabakh war. The risk factor of its relationship with Israel could therefore skyrocket quicker than President Aliyev would be willing to roll it back, given Azerbaijan’s longstanding reliance on the US-based Israel lobby as a shield against unfavorable US policies promoted by the Armenian-US diaspora.
Tehran, however, would have options aplenty in the potential military and geo-economic alliances with Yerevan to continue mounting pressure on Baku.
The Turkey factor
To Azerbaijan, Turkey has been its single most constant and reliable guarantor of security and economics throughout its tussles with Armenia. However, Azerbaijan’s ties with Turkey factor in very differently when it comes to tensions and potential conflict with Iran.
Eldar Mamedov, an Azerbaijani analyst at Eurasianet and the Quincy Institute, states that “… military confrontation with Iran – a country with eight times the population – clearly is not in Baku’s interests. All the more so because even Baku’s main ally, Turkey, is unlikely to fight a war with Iran on Azerbaijan’s behalf.”
Citing Turkey’s self-interest in keeping its own differences with Iran to manageable levels, Mamedov adds that “policymakers in Baku would be wise to realize the limits of the Turkish support in any potential future conflagration with Tehran.”
Turkey’s influence, in fact, looms large in the details of the gas swap deal. Giving Iran transit state status in the Turkmenistan gas trade is a decision set in the context of geo-economics – where Baku has traditionally taken its cue from Ankara, whose territory is the terminus for Azerbaijan’s most vital trade and transport links, such as the BTC oil pipeline, the Southern Gas Corridor (SGC) pipelines, and the BTK railway.
Of great interest to Iran is that Turkish interests seem to propel the planned Azerbaijan–Turkmenistan gas trade more than Azerbaijani ones.
Azerbaijan’s interest in Turkmen gas does not extend beyond buying it to fill the unutilized capacity of SGC, which it will be able to do itself once it boosts its own gas production.
Turkey, however, has long sought the revival of the dormant Trans Caspian Gas Pipeline (TCP) connecting Turkmenistan via the Caspian Sea to Azerbaijan with the objective of further linkage to the SGC, through which Turkmen gas then flows to Europe via Turkey.
The TCP is core to Turkey’s drive to render itself Turkic Central Asia’s ultimate gateway to the west. This would entail Turkmen gas exports to and transit across Azerbaijan at a much larger, longer-term scale.
Since the discovery in the 1990s of huge gas fields in its own Caspian waters, Azerbaijan has, in fact, treated Turkmenistan as a potential competitor for the European market.
Baku therefore walked away from the TCP project, declining to settle its maritime dispute with Ashgabat over the Dostluk gas field, which itself was enough to inhibit work on the TCP. So when Azerbaijan resolved the Dostluk dispute in January this year and agreed to jointly develop it with Turkmenistan, Ankara’s influence once again stood out.
The fact that Azerbaijan’s top ally sees fit to deploy Turkish-Azerbaijani regional interests as collateral for de-escalation with Iran will therefore encourage Iranian strategists by adding pressure on Baku to accept Iran’s assertive behavior as a ‘new normal.’
Iran-Azerbaijan tensions are far from over
Despite Iran’s gains from it, the gas swap deal is still a calculated concession from Azerbaijan and far from a capitulation.
Once the TCP is built, the swap arrangement with Turkmenistan via Iran will become redundant, as Turkmen gas will be piped directly to Azerbaijan. This is not an unlikely scenario given that the wealthy European Union (EU) designated the TCP a ‘project of common interest,’ thus qualifying it for EU financing and diplomatic support.
This factor raises the stakes – and the risks – in the Iran-Azerbaijan bilateral relationship. More hawkish minds in Baku may, after all, be inclined to interpret the completion of Iran bypassing TCP and the disposal of the gas swap arrangement as a sign that isolating Iran in the South Caucasus has become a viable strategy.
Such a notion would almost certainly receive enthusiastic backing from Israel, who lacks Turkey’s economic incentive in averting an Iran-Azerbaijan conflict and may even see Baku’s reliance on its US lobby deepen if it heads into a fight without Turkey’s blessing.
Ultimately, for Baku, these are fairly risky variables on which to base its present and future roadmap for dealing with Iran. In contrast, Tehran benefits from a more reliable set of options to sustain and escalate its posture when required, with the decisive advantages of geography and size playing to its favor.