Azerbaijan’s President Ilham Aliyev and Iranian President Ebrahim Raisi have averted conflict through geo-economic compromise
At the end of the 2020 Nagorno-Karabakh war – which Azerbaijan won with Turkish support and Russian diplomacy – Iran was widely seen by analysts as the conflict’s biggest loser, in terms of its regional strategic interests.
Without wasting much time, however, Tehran flipped those fortunes by very proactively engaging its soft power in the South Caucasus to advance its geo-economic interests. This is arguably due to Iran’s concerns over Turkish-Azerbaijani expansionist designs in the region.
In the main, Iran has sought to revitalize its relations with Azerbaijan to mitigate Turkey’s push for control over the Zangezur Corridor, a strategic transportation route bypassing Armenian territory close to the Iranian border.
The corridor’s opening is said to be dependent upon the development of a comprehensive Armenian-Azerbaijani agreement. In this regard, Tehran is engaging with both countries simultaneously, and in doing so has helped reduce Baku’s political pressure on Yerevan.
Resetting relations with Azerbaijan
On March 11, 2022, Azerbaijan and Iran signed an agreement to establish new railway, highway, and energy supply lines connecting the southern territories of the disputed Karabakh region (captured by Azerbaijan) to the Azerbaijani Nakhichevan exclave.
According to the agreement, the new highway will be 55 km long and will pass through northern Iran, eventually connecting to Nakhichevan. In addition to the highway, two railway bridges and a road bridge will be constructed over the bordering Arax River.
Iranian political analyst Vali Kaleji says these projects have geo-economic significance for both Azerbaijan and Iran.
For Baku, the construction of this highway is essential for several reasons. First, it is a continuation of an already existing highway in Azerbaijan and will draw investment into the southern regions of Karabakh currently under the control of Baku.
Second, the 55-km highway through Iran will offer an alternative to the Zangezur corridor that Azerbaijani President Ilham Aliyev was pushing for after the trilateral statement, which put an end to hostilities – for now – between Baku and Yerevan.
Despite the fact that the trilateral statement called for the opening of trade routes and communication, it did not mention anything about a ‘corridor.’ President Aliyev has largely promoted the Zangezur Corridor idea for domestic consumption while adding political pressure on Armenia to sign a peace treaty over Nagorno-Karabakh.
To date, Russia, Armenia and Iran have disregarded Baku’s Zangezur Corridor claims.
To prevent another war between Baku and Yerevan, Tehran came up with an alternative solution by providing this alternative route that will lift some pressure from Armenia’s shoulders, as Azerbaijan was threatening to gain the corridor by any means necessary.
Moreover, Baku is also concerned that if the Armenian Prime Minister Nikol Pashinyan’s government falls and the opposition comes to power, the successive government will not provide any corridor to Azerbaijan through the Armenian territories. Hence, as Keleji noted, “Baku is deliberately pursuing another option should the Zangezur Corridor not come to fruition.”
Finally, Azerbaijan will establish a link with Nakhichevan through Iran, providing additional Iranian leverage over Baku in the future.
Iran, in turn, has its own considerations for allowing the construction of a highway and railway across its territory that would connect Azerbaijan proper to Nakhchivan.
In reaction to the expansionist narrative pushed by Azerbaijan over the Zangezur Corridor and Azerbaijani incursions into bordering villages in Syunik (southern Armenia), Iran drew its red lines and its Islamic Revolutionary Guard Corps (IRGC) threatened to use military force if necessary to prevent any territorial change in its 44 km border with Armenia.
As such, Tehran sees the construction of a new highway and railway line via Iran as an appropriate alternative to the Zangezur corridor that will alleviate the military pressure on southern Armenia.
For this reason, Ahmad Kazemi, an Iranian expert on the South Caucasus region, in his article “Baku’s reconciliation with geopolitical realities” wrote that Baku is pushing a “fake Zangezur corridor” to appease Turkey, Israel, NATO while following pan-Turkic dreams.
It was only last year that Aliyev declared: “The corridor that is going to pass through here is going to unite the whole Turkic world.”
For Kazemi, this “Turanic corridor” will go against the interests of Iran, Russia, and China. It is therefore inevitable that these three states will not allow geopolitical changes on Armenia’s southern borders.
Meanwhile, with the ongoing war in Ukraine, Moscow has focused its attention on the importance of the North-South trade route. According to Kaleji, strengthening this transit route will aid in countering the tightening economic sanctions and transit restrictions imposed on Russia by the west.
In this regard, the Iranian Roads and Urban Development Minister Rostam Qasemi visited Moscow on 30 April to sign a comprehensive agreement on cooperation in the field of transportation. Both countries agreed to accelerate the construction of Azerbaijani-Iranian railway to connect Moscow to the strategic Persian Gulf – a security concern of western powers since the Cold War era.
In February, during an Iranian-Armenian conference held in Yerevan, an Iranian diplomatic source told The Cradle that “Iran will take all the necessary measures to prevent the loss of the strategic Armenian-Iranian border and will do all it can to prevent a new war.
Tehran realizes that any such loss will further increase Turkish influence in the region and that Iran was an indirect target of the 2020 war in Karabakh, with the aim of isolating Iran regionally.
Within this context, the Iranian-Armenian railway line from Meghri, Armenia’s Syunik province, could have been an alternative route connecting Iran to Russia, but it suffers from high costs and has not seen any progress since 2009.
Armenia’s poor infrastructure, its conflict over Nagorno-Karabakh with Azerbaijan, and its slow progress in the construction of the North-South highway (over the past twelve years, it has implemented only five percent of the 556-kilometer highway connecting Georgia with Iran) has further isolated and slowed down Armenia’s participation in the regional economic project.
Armenia’s gateway to Asia
However, over the past four months, Iran and India have been pushing Armenia to take crucial steps to reinvigorate the north-south transport project. As a result, important meetings between Iranian and Armenian officials have been organized to address trade, transit, and energy issues.
On 2 March, leading a high-ranking delegation of trade officials and private entrepreneurs, Iranian Minister of Industry, Mining, and Trade, Reza Fatemi-Amin paid a visit to Armenia as part of Tehran’s efforts to strengthen trade ties with its neighbors.
This was the first visit to Armenia by senior Iranian officials since President Ebrahim Raisi took office in August 2021. Accompanying the delegation were the CEOs of 35 Iranian private companies.
The Iranian side stated that Tehran attaches great importance not only to the development of economic relations with Armenia but also considers it as a “gateway” to the markets of Russia and other Eurasian Economic Union (EAEU) member countries.
For the rail connection, Miad Salehi, head of the Islamic Republic of Iran Railways, pointed to three possibilities for rail transit between Iran and Armenia. The first two rail connections are:
- The Jolfa-Nakhchivan-Yerevan.
- The Jolfa-Nurduz (in Iran) and Yerevan-Nurduz (in Armenia) railroads, which were agreed upon seven years ago though not realized.
Iran has also proposed a multi-modal transit route from Yerevan to Jolfa by road, and then southward to the port of Bandar Abbas by rail, essentially opening the gates of Asian markets for Armenia.
Iran hasn’t been pushed out of the South Caucasus
After the trilateral statement in 2020, Iran felt isolated from the South Caucasus, though its absence did not last long. Following the election of President Raisi, Tehran adopted a proactive balanced foreign policy in its neighborhood to secure its primary geo-economic interests.
The Iranians have realized that the Zangezur Corridor poses a threat to their national security as it bypasses Iranian territory and prevents Iran from gaining transit fees from Azerbaijani trucks. But it also threatens to reshape the strategic international borders between Iran and Armenia to the benefit of Turkey, Azerbaijan, and by extension, their mutual ally, Israel.
Tehran recognizes that were Azerbaijan to succeed in imposing the Zangzur Corridor on Yerevan, Baku could connect to Turkey, Israel, and the European Union by land. Crucially, Iran also interprets this as an expanding presence of Israel and NATO on its borders.
During his Caucasian tour this month, Iran’s national security chief, Rear Admiral Ali Shamkhani, held talks in Yerevan with his Armenian counterpart and Prime Minister Pashinyan, where he stressed that Tehran was against any actions leading to a geopolitical change in the region.
Rather than accepting a lesser role, Iran has successfully deployed its economic soft power to recalibrate the field and increase its leverage over Azerbaijan. On one hand, Tehran fostered the construction of a railway with Azerbaijan to connect with Russia; on the other hand, it strengthened its trade, energy, and communication projects with Baku’s archenemy, Armenia.
Iran’s dialogue with both countries has – for now – arguably lifted Azerbaijan’s military and political pressure on Armenia, safeguarded its national interests, and prevented another war near its northern borders.