Iran’s rapprochement with Azerbaijan opens dangerous dynamics

The relentless rise of Iran is making itself felt in relations with Azerbaijan, the oil-rich Caspian Sea state, which borders issue with Armenia, is being intensely courted by Tehran, Saudi Arabia, and Turkey. Israel, too, cultivates its relations with Baku.

A photo of the leaders of Russia, Iran and Azerbaijan holding hands at a summit in Tehran before formal talks
Tehran, Nov., 2017 (L to R): Russian President Vladimir Putin, President of Iran Hassan Rouhani and President of Azerbaijan Ilham Aliyev. © dpa

In a nutshell

  • Conflict between Iran and Saudi Arabia can spill over into the South Caucasus
  • Iran is trying to manipulate Azerbaijan’s Shia population through religious agitation, but also offers broad cooperation to Baku
  • Joint projects have a stabilizing impact, but the “frozen” conflict in Nagorno-Karabakh remains the region’s worst ticking bomb

The relentless rise of Iran is presently making itself felt in the South Caucasus, a region ridden by border conflicts and great power rivalry. The inroad is Azerbaijan, a Muslim nation of 10 million on Iran’s northern border. Although relations between Baku and Tehran have long been tense, recent developments have been marked by surprising elements of rapprochement.

Two coinciding factors have combined to produce this outcome. One was the election, in 2013, of Hassan Rouhani as president of Iran. His pragmatism has translated into a broad agenda of cooperation that ranges from infrastructure projects to energy development and security promotion.

The second has to do with concern in Baku about Azeris leaving to join ISIS in Syria and Iraq. Azerbaijan is an authoritarian, former Soviet republic with strong separation of religion and state. However, the 2013 lifting of a quiet ban on preaching by Islamic scholars linked to Iran opened the way for Iranian manipulation of the country’s majority Shia Muslims. According to a 2017 report by the independent news agency Turan, out of some 150 Muslim religious schools (or madrassas) in Azerbaijan, 22 were controlled by Iran.

Many players

What makes Azerbaijan important to watch is a possibility that Iran’s increasing influence there may cause the long-standing conflict between Shia Iran and Sunni Saudi Arabia to spill over into Transcaucasia (also known as the South Caucasus). This comes at a time when Israel has emerged as an important supplier of arms to Azerbaijan, and when Saudi Arabia is also taking a more active stance in that country.

Iran remains the only direct neighbor Yerevan can count on.

The situation is further complicated by the fact that mounting tension between Azerbaijan and Armenia threatens to pull Turkey and Russia into the conflict as well. While Ankara angrily denies accusations that it orchestrated a genocide on Armenians in 1915, Moscow has assumed the role as guarantor of the security of landlocked Armenia. As both Turkey and Azerbaijan have closed their borders, Iran remains the only direct neighbor Yerevan can count on. If the flow of Russian gas via Georgia were to be disrupted, the Iran-Armenia gas pipeline could, for example, take over.

Viewed against this background, the rapprochement between Azerbaijan and Iran comes across not only as surprising but also alarming. The nightmare scenario of something going badly wrong could ruin the day not only for the regional players but even more so for Russia, long accustomed to viewing this region as its backyard.

The considerable latitude that Azerbaijan has enjoyed in its foreign policy derives from its hydrocarbons wealth. The country’s road from rags to riches originated in a 1994 “deal of the century” between then-President Heydar Aliyev and the energy giant BP to unlock vast offshore energy deposits in the Caspian Sea. The ensuing hydrocarbon bonanza served to transform the country from an economic and political backwater into a regional energy hub of considerable importance. When Baku hosted the Eurovision Song Contest in 2012, visitors were duly impressed not only by the glitzy modern townscape but also by the largely secular nature of Azeri society.

Seen from the Kremlin’s perch, these were not welcome developments. The deal between Baku and BP was especially grating, as it represented the first case of pipelines being built to take energy from the Caspian region to markets in Europe, bypassing Russia.

Although the Kremlin fought long and hard to prevent Azerbaijan from achieving an appreciable position in the energy business, over time it has come to terms with this as a fact of life. Azerbaijan has not seriously undermined Russia’s role as an energy provider for Europe, nor has it challenged Russia’s role as a regional hegemon.

Infrastructure and security

The key to the latter lies in the conflict in Nagorno-Karabakh, an autonomous enclave within Azerbaijan that is populated by ethnic Armenians. This is the longest-standing of the “frozen conflicts” that have become the hallmark of Russian foreign policy in its “near abroad.” Although the Kremlin has a distinct preference for Armenia, where it has a large military base, it has been quite happy to provide weapons for both sides. This enables the Kremlin to preserve a rough military balance between the warring parties.

The recent warming of relations between Iran and Azerbaijan presents Russia with two sets of challenges that may alter the geopolitics of the South Caucasus. One is related to infrastructure development, and the other to security alliances and weapons deliveries.

The mainstay of the former is the Iranian vision of a North-South Transport Corridor, a 7,200-kilometer-long combination of roads, rail and sea lanes that would traverse Iran to connect the Caucasus with the Indian Ocean and the Persian Gulf on the one side, and the Mediterranean on the other. Although this project is basically politically neutral and would make much economic sense, it has been blocked by the United States’ long-standing policy of curbing Iran’s development and influence. However, as relations between Iran and Russia warm up, the idea may now gain traction.

The core principle of Baku’s foreign policy has been to remain nonaligned.

At a November 1, 2017 meeting in Tehran, Azerbaijan, Iran and Russia adopted a “Tehran declaration” that envisions a broad range of cooperation, from energy development to the formation of a single market and trade in national currencies. Much is also happening on the ground, especially concerning energy development.

Even before that meeting, the three countries formed a work group on integrating their respective power systems. Joint interests in developing offshore oil and gas deposits may finally help resolve border disputes in the Caspian. In February 2018, a rail link between the city of Astara in Azerbaijan and its namesake across the border in Iran was approved. This link is key to the transport corridor.

It was significant that the meeting in Tehran took place on the day after the U.S. imposed sanctions on Iran. While Iran is happy to receive whatever relief it can, Moscow sees an opportunity to advance further its influence over processes ranging from the Shanghai Cooperation Organisation to the Astana peace process for Syria, both being cases where it has invited Iran to join.

Baku’s angle

The key player in the emerging tripartite alliance is Azerbaijan, which will have to balance the gains from energy and infrastructure investment against implications for its role as an independent player.

The core principle of Baku’s foreign policy has been to remain nonaligned. President Heydar Aliyev decided already in 1993 to opt out of the Russia-led Collective Security Treaty Organization (CSTO) and he refused to accept Russian peacekeepers in Nagorno-Karabakh. His son and successor Ilham Aliyev has resisted Russian urgings to join both the Customs Union and the Eurasian Economic Union (EEU). He has also kept the European Union at arm’s length, being active in its Eastern Partnership but opting out of signing an association agreement.

This independence is now being challenged. Iran’s signing, in May 2018, of a three-year provisional free trade agreement with the EEU delighted Russia and placed Baku in a pickle. Armenia is a member of both the CSTO and the EEU, while Azerbaijan is not and does not want to be part of the Russian club. Russia would dearly like to have both belligerents inside its tent, but this would seriously erode Azerbaijan’s independence. It remains to be seen how this pans out. Various solutions might be possible in the end – even Baku accepting observer status in the EEU.

Mutual distrust

An added reason for Baku to be wary may be the mutual suspicion that lingers from the time of the 1828 Treaty of Turkmenchay, by which the Russian Empire and (defeated) Persia agreed on a border that placed a majority of Azeris – also referred to as Azerbaijanis or Azerbaijani Turks – inside Persia (subsequently Iran). Today, Baku fears that Shia agitation from Iran may undermine its own strongly secular regime. Correspondingly, Tehran fears Azerbaijani unrest as a threat to its clerical regime. Azeri speakers account for about a quarter of the population in Iran.

Picture of a military funeral ceremony in Azerbaijan in 2016
BAKU, April 11, 2016: Funeral ceremonies for Azerbaijani Armed Forces officers killed in the “Four Day War” clashes in Nagorno-Karabakh. © dpa

What concerns Baku is that Iran is bent on following the Russian example of playing both sides in Nagorno-Karabakh. Tehran is committed to increasing security cooperation with Azerbaijan, including weapons sales and joint production. This was evidenced by the formation, in October 2017, of a collective military working group to explore cooperation in fighting terrorism and in coordinating naval forces to provide security for energy development in the Caspian.

However, Iran is not ready to downgrade its relations with Armenia. Baku has been upset by repeated appearances of Karabakh officials in Iranian media. If it hopes, though, that the North-South transport corridor will dissuade Iran from also constructing a rail link to Armenia, it may have to think again.

Two sets of players with opposing interest are taking their rivalry into a region with a potential for increased violence.

In turn, what gives a pause to Iran is that its archenemy Israel has been hard at work developing its security relations with Azerbaijan. Already in 2012, when Israeli air strikes against Iran were believed to be imminent, rumors were circulating that Israel would be allowed to use bases in Azerbaijan as staging posts for drones and for rescuing any downed pilots. Although Baku denied this, there is no mistaking the fact that Israel has become an important supplier of weapons and security equipment to Azerbaijan. Israel-made armaments, drones in particular, have been used in Nagorno-Karabakh. In return, Azerbaijan provides Israel with 40 percent of its oil. As part of the new alliance, Tehran demands that Baku coordinate its purchases of arms from Israel.



Even worse from Tehran’s point of view is that Saudi Arabia is also increasing its presence in Azerbaijan. As part of a “reinforced military dialogue,” Azeri Defense Minister Colonel General Zakir Hasanov visited Saudi Arabia in April 2017, and a delegation from the Saudi defense ministry showed up in Baku in February 2018 – shortly before a visit there by Iranian Defense Minister Amir Hatami.

The real danger involved in all these developments is that two sets of players with fundamentally opposing interest are taking their rivalry into a region with a very high potential for increased violence. Much will now depend on how Azerbaijan plays the new cards it is being dealt.

Following the April 2016 four-day-war in Nagorno-Karabakh which resulted in the loss of a small chunk of territory for the Armenians, Russia pledged to reduce its weapons sales to Azerbaijan. However, in January 2018, Baku received another major shipment, including BTR-82A armored personnel carriers and 9M 123 Khryzantema anti-tank missile systems. In May 2018, responding to a snap visit by newly elected Armenian Prime Minister Nikol Pashinyan to Nagorno-Karabakh, Baku declared it was ready for “large-scale military operations.”

Although Russia remains the leading supplier of weapons to Azerbaijan, its crucial decision in 2016 to provide Iskander missiles to Armenia caused Baku to diversify its petrodollar-financed arms purchases, turning for hardware not only to Israel but also to Turkey, Belarus, Ukraine and the Czech Republic. Also, it hopes to receive missiles and multiple launch rocket systems from Iran.

If President Aliyev feels now emboldened to go on a new offensive in Nagorno-Karabakh, it will inevitably force Russia to step up its support for Armenia. This in turn could activate Turkey, which, according to its former prime minister Ahmet Davutoglu in 2016, pledged to “stand shoulder to shoulder with Azerbaijan against Armenian aggression and occupation until the end of time.” And if Israel steps up its provision of hi-tech drones and radars for the Azeri side, Iran may be tempted to counter it by providing support for Armenia.

The most likely scenario is that Russia will persist in its role as a regional power broker, accommodating – and gaining from – Iran’s rise of influence without letting it translate into an open armed conflict for the contested province. However, the challenges are multiplying and the prospect of such a war cannot be dismissed. The Kremlin may find, to its dread, that it just has too many balls in the air at the same time.

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