Rising Iran-Azerbaijan rivalry signals a changing Caucasus

The region is fast becoming a new geopolitical tinderbox, but both countries have good reasons to rebuild ties

Iran's Foreign Minister, centre, and Azerbaijan's ambassador to Tehran Ali Alizada, right, at a press conference at the Tajrish hospital in Tehran. AFP
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The shifting geopolitics of the South Caucasus is fast emerging as a new global flashpoint. It is not clear if last week’s attack on the embassy of Azerbaijan in Tehran is linked to heightened tensions between Iran and Baku. For now, the presidents of both countries have opted to calm down the war of words. Developments in Isfahan and Tehran on Sunday, raise further concerns. Still, there are key reasons to believe that this downward spiral in relations cannot be stopped unless both countries do much more to put relations back on a constructive track.

For sure, there is much that Iran and Azerbaijan can do together – namely in the area of economic co-operation. This could include completing the much-touted International North-South Corridor (INSC) that traverse both countries as it provides a new trade transit route from the Indian Ocean to Europe. On the other hand, the respective leaderships of both Iran and Azerbaijan have made certain geopolitical calculations that are increasingly likely to make cordial relations a difficult objective to achieve.

First, let’s set the scene. Iran and Azerbaijan are close on many levels. Both are Shiite Muslim-majority countries. There are about 10 million people living in Azerbaijan but an estimated 15-20 million ethnic Azerbaijanis live in Iran. This separation came about when the Persian Empire lost its Caucasian territories to the Russians in the 19th century. When the Soviet Union collapsed in 1991, Iran welcomed the birth of the Republic of Azerbaijan and it never seriously invested much in exporting its Islamist ideology to its Shiite brethren to the north.

There were two simple reasons. First, after centuries of Russian and Soviet rule, the independent Azerbaijanis were by and large unreceptive to Tehran’s reactionary Islamist ideology. The second, much more important, reason was that Moscow from the mid-1990s onwards made it clear it did not look kindly to any Iranian (or other Middle Eastern) encroachment in the former Soviet south territories. Iran, already alienated from the West, chose not to upset Moscow’s sensitivities. And for much of the time since the Soviet collapse, Tehran respected Russia’s dominion over the South Caucasus.

This state of affairs came crushing down in 2020. This is the year Baku fought a new war with Armenia over disputed territories. Tehran was blindsided by both Azerbaijan’s military triumph but also the war’s broader geopolitical implications. Baku’s military victory over Armenia had been greatly assisted by two of Iran’s regional rivals, Turkey and Israel.

Not only did Tehran wake up to a deeper Israeli and Turkish footprint on its northern border but Russia’s inability to keep Turkey and Israel out of the South Caucasus was probably the bigger shock to Tehran. Realising that Moscow’s sway in the region had diminished, and was unlikely to return any time soon since Moscow became increasingly focused on its military mission in Ukraine, the Iranian government was forced to look for ways to regain influence in the region.

In a nutshell, Tehran chose to pursue a carrot and stick strategy to shape Baku’s next move. The two countries could focus on expanding economic and even military co-operation if only Azerbaijan refused to become a partner for Israel and Turkey, in their separate rivalries with Iran. If Baku refused to oblige Iran, then Tehran would look for ways to hit back, including raising questions about Azerbaijan’s territorial integrity.

And Iran has been hellbent in opposing a key effort by Baku to create a land corridor – Zangezur – from Azerbaijan proper to its exclave of Nakhchivan that borders Turkey. Baku’s planned corridor would run through Armenian territory. Tehran sees this as an effort by Azerbaijan, backed by Turkey, to cut it off from Armenia, the Christian nation Tehran has consistently backed in its conflict with Azerbaijan.

Iranian officials claim that the Israelis too want to use Azerbaijani territory to launch subversive operations against Iran. Tehran’s ambassador in Baku recently warned that Iran has no desire to see Azerbaijan become a battleground for Iranian-Israeli rivalry but that what happens next would be up to Baku. To Tehran’s deep frustration, Baku instead on January 11 appointed its first ever ambassador to Israel. The Iranians read this to mean that Baku has ultimately chosen to side with Israel in its regional rivalry with Iran.

It can be argued that Tehran is the guiltiest in creating this uncomfortable geopolitical situation for itself. Iran for too long chose to give priority to Russian interests in the South Caucasus. Nor were Iranian officials monitoring Moscow’s declining sway in this part of the world. Finally, Tehran’s fixation over the past decade on intervening in the Arab world – from Lebanon to Syria to Iraq and Yemen – meant that it deprioritised the South Caucasus in its foreign policy.

It was too late by the time Tehran awakened to the new realities of the South Caucasus after 2020. Tehran will continue to play catchup but it has to admit that its policy of carrots and sticks toward Baku has leaned too much on the latter. Tehran needs to do more to incentivise Baku to shape its next regional move.

If this is not addressed, then, in a dangerous tit-for-tat, the Iranian authorities might hint that Azerbaijan has historically been part of Iran. The leadership in Baku could retaliate by claiming to represent the many millions-strong ethnic-Azerbaijani population living inside Iran’s borders. It is truly a tinderbox. And yet, both Tehran and Baku have solid reasons to step away from the brink.

Published: January 29, 2023, 2:00 PM