The recent loosening of anti-nuclear economic sanctions against Iran will change its role along its northern frontier, which faces the South Caucasus, the Caspian Sea and Turkmenistan. Iran will be able to sell more oil, and the ensuing revenues, linked with new means of transportation, will allow it to throw its weight around, to bring grief to some of its neighbours and satisfaction to others.
Iran has been active in Central Asia over the past two decades. In the east, Iran-Turkmenistan relations have been sometimes tense, mostly due to irregularities in Tehran’s payments to Turkmenistan for natural gas, but overall they have remained positive. Existing pipelines allow Iran to buy up to 20 billion cubic metres of Turkmenistan natural gas per year, and after the anti-nuclear embargo is lifted, Iran will be able to use all available capacity of the pipelines.
Another eastern interest for Iran is construction of a railway linking Kazakhstan, Turkmenistan and Iran. This project would allow Central Asian oil and other mineral resources to reach Iranian ports for further export.
But to the west, below the Caucasian Mountains running northwest to southeast between the Black and Caspian seas, Iran borders — and would benefit from — Eurasia’s oldest “frozen conflict:” Nagorno-Karabakh’s 1991–94 war in southwestern Azerbaijan between the majority ethnic Christian Armenians and Muslim Azerbaijan itself. So geography dictates Iranian involvement and merits a closer look at Iran-Azerbaijan relations.
This has been a rocky history, complicated today by the two countries’ competition to sell their oil and gas internationally. And then there’s the ethnic dimension. Three western provinces of Iran together have a population of about eight million, and more than 70 percent of these people are Azerbaijani. There is a sentiment for reunification among them on both sides of the border. The separatist Southern Azerbaijan National Awakening Movement was established in Iran in 1995 to separate these three provinces from Iran and merge them with Azerbaijan.
During the Nagorno-Karabakh war, Azerbaijan reached out to Iran for normal relations, but they deteriorated later. More than 10 years ago, then-Azerbaijani president Heydar Aliyev reportedly said, “When I say ‘Iran,’ I think ‘Southern Azerbaijan’,’’ a not-so-veiled claim to Iranian territory. In November 2010, Azerbaijan’s president, Ilham Aliyev, called for tougher Western sanctions against its neighbour. Anti-Iran demonstrations in Azerbaijan continued through 2011 and 2012. Iran responded accordingly.
Then Israel, Iran’s chief bête noire for decades, got into the act. It supplied military drones to Azerbaijan, and helped Azeris produce their own. Israel’s Elbit Systems Ltd. (a defence electronics manufacturer employing 11,000 people worldwide) and other companies were part of the modernization of Azerbaijan’s armaments. The possibility of an Israeli air strike on Iran’s nuclear projects included the option of landing its jets at Azeri airfields (one of them, Lankaran, close to the Iran border, is operational now). Since 2010, the country has also acquired two squadrons of Russian air defence missiles.
None of these weapons would be much use against Armenia, the longstanding enemy with no military aircraft, but they can provide air defence against Iran, the possible new threat.
Azerbaijan also co-operates with the U.S. military. Blackwater (now called Academi) mercenaries trained Azerbaijan’s marines and the U.S. provided vessels for the Azerbaijan navy. The prime targets for all this Azerbaijan hardware are still Armenia and Nagorno-Karabakh, but the possibility of conflict with Iran was part of its planning.
From its side, Iran has beefed up its military along its northern border and in March 2013 it launched the Jamaran-2 destroyer in the Caspian Sea. It will enter service in 2014 and be a powerful argument in the dispute with Azerbaijan over the offshore Sardar-e Jangal oilfield. Iran will have more money for arms after oil revenues start coming in and will probably spend it.
It’s impossible to distinguish between state-sponsored and grassroots Shia religious extremism in Azerbaijan as long as Iran remains a Shia Muslim state. Azerbaijan’s security ministry is alert to Iran-sponsored networks in Azerbaijan and reported on them in 2008, 2009, 2011 and 2012 (twice). In all these cases, Azerbaijan claimed that Iran’s Revolutionary Guards had targeted Israeli interests in Azerbaijan. All of which further tangles relations between the two countries.
The election of Iranian President Hassan Rouhani brought some change. He and Azeri President Ilham Aliyev met at the 2014 Davos economic forum, where Rouhani offered assistance in oil servicing, a field in which U.S. companies already operate, so it will be an uphill battle for Iran. Some improvement of Azerbaijan-Iran relations is likely, but disputes over Caspian Sea shelf oil and gas will overshadow it.
The relaxation of the tensions between Iran and the West, and Iran and Azerbaijan could possibly to flow open the tap for Azerbaijani natural gas into Europe. There are plans to use a combination of the existing Baku-Tbilisi-Erzurum pipeline (BTE) and the proposed Trans-Anatolia pipeline, to carry the gas through Turkey to Europe. These and other pipelines share a narrow corridor along the Kura River in Azerbaijan, uncomfortably close to its Nagorno-Karabakh “security belt” districts.
So, fixing the Nagorno-Karabakh conflict is critical for Azerbaijan, and Iran and Russia know this. From the standpoint of their economic interests, it is to their advantage to preserve the volatile situation of Azerbaijan and have less competition for their own oil and gas sales.
The realities of the economic blockade of Armenia by Turkey and Azerbaijan since 1993 and sanctions against Iran practically forced both countries to build closer relations and get maximum advantage through their 42-kilometre common border. In 2007, Russia’s Gazprom company built a 140-kilometre natural gas pipeline for Iranian natural gas to Armenia from this gap. Armenia exports electricity to Iran in exchange. Trucks between Armenia and Iran also cross here. After the sanctions on Iran are lifted, this road will become an important alternative to Georgia’s ports for Armenia.
The possibility of closer Armenia-Iran co-operation is a stimulant for the Minsk Group countries (peace brokers who came together following the Nagorno-Karabakh war) to be more, but not very, receptive to Armenia’s demands. Armenia wanted Iran to send peacekeepers to the contact line between Armenia and Nagorno-Karabakh, and Iran responded enthusiastically. But Minsk Group members such as Russia, the U.S., France, Turkey and Azerbaijan wanted no such Iranian troops in the region, so the idea died. Nevertheless, ideas like this will keep coming back, mainly because of Russia’s revitalized interest in the region and Iran’s sanction-free strength.
In September 2013, Russia persuaded Armenia to drop plans to sign the association agreement with the European Union in favour of the Eurasian Union, Russia’s project to build a rival to the EU. The arguments Russia used are not known, but they succeeded just as an announcement was made about reactivation the Abkhazian railway between Armenia and Russia. Coincidence? Who knows?
For its part, Iran could provide Armenia with access to its ports if the Armenian rail network were to be connected to the Iranian one. Such an Iran-Armenia railway could provide a land gateway for Russian access to Iran, and possibly to Iran’s Indian Ocean ports. This would benefit Russia, Armenia and Iran and bolster ties among them.
Naturally, the stronger such a de-facto alliance, the weaker will be Armenia’s willingness to concede anything to Azerbaijan. This would guarantee a continuation of the Nagorno-Karabakh conflict, a near-war that threatens the export routes of Azerbaijan’s oil and gas through the South Caucasus. Russia and Iran, oil producers, would benefit from continued high risks for Azerbaijan energy exports along this route.
The increase of Iran’s oil revenues after the sanctions are gone will allow it to energize its role in the South Caucasus, supporting Armenia and freezing the Nagorno-Karabakh conflict in place. So, tension in the South Caucasus is, remotely or not, one possible result of lifting sanctions on Iran.
Currently an independent consultant, Dr. Zhalko-Tytarenko is the former head of the National Space Agency and member of National Disarmament Committee of Ukraine. He is grateful to Robert M. Cutler, senior research fellow at Carleton University, for fruitful discussions on the subject of this article.