A little more than four months since a White House ceremony marking a diplomatic breakthrough between Armenia and Azerbaijan, the wider regional repercussions have continued to reverberate. With an unprecedented agreement on the restoration of transit through southern Armenia that was backed by the initialising of a bilateral peace treaty, the geopolitical landscape of the South Caucasus has undergone a seismic shift.
Across the broader region, Russia remains somewhat tentative but quite attentive, while Turkey is readying itself for greater influence amid a normalisation effort with Armenia. It is Iran, however, that has the most to lose from recent developments, especially in terms of a further erosion of power after the weakening of its proxy forces in the west and a threat of encirclement to the north.
It is the immodestly named Trump Route for International Peace and Prosperity or Tripp project that is the main driver of this evolving change in regional geopolitics. Although not as grand or as ambitious as the scale and scope of this project, the pace of the negotiations over Tripp’s implementation has been consistent and comprehensive.
The US approach is based on a twin-track model of two separate and distinct bilateral formats. The first track is limited to US talks with Armenia and has already been spurred by the delivery of a first tranche of $145 million for the project, as well as by visits to Armenia by diplomatic officials and US experts on border security. The second track consists of bilateral talks between the US and Azerbaijan, but there has been no American investment to date.
For its part, the Armenian side has moved quickly to complete its planning and preparations by the deadline of the end of the year. In addition, it has moved beyond the initial phase of road and rail links to also plan for the expansion of energy and digital connections. Although decisions on either the financing or the construction of the Tripp project have yet to be disclosed, the repercussions are already noticeable.
For Tehran, the breakthrough between Armenia and Azerbaijan is much more than a diplomatic surprise from a strategic region along Iran’s northern borders. No matter how much or how little this new agreement has attained, the immediate impact is already being felt, with the new momentum under way in the neighbouring South Caucasus posing several significant challenges.
First, from a broader context, the most pressing threat to Iran stems from the danger of encirclement, as western power is likely to expand quickly in this sensitive zone. More specifically, the shift in the geopolitical landscape ushers in a new period of even less Russian influence and an unexpected American presence in the South Caucasus. With Russia still ever more distracted and overwhelmed by its invasion of Ukraine, Iran now lacks any effective partner capable of countering greater western involvement and presence along Iran’s northern frontier.
At the same time, these developments in the South Caucasus will also usher in a new opening and opportunity for Ankara as a pivotal transit partner, thereby empowering and emboldening a key Iranian rival in the region.
A second direct challenge to Iran is rooted in the danger of further isolation and exclusion from the restoration of regional trade and transport. This is an immediate result of the agreement on connectivity concluded by the Armenians and Azerbaijanis, as the planned East-West axis of road and railway links undermines the importance of southward links to Iran.
This represents a reaffirmation of the necessity of a greater Turkish role in the region, especially given the course of Armenia’s normalisation of relations with Ankara as an integral element in the second stage of this broader connectivity project.
A third threat is now demonstrated by the sudden demise of Iran’s vision of partnership with Armenia. It is not Tehran that has turned away from Armenia – Iran’s only stable and friendly neighbour – but Armenia, which now views Iran as a country that is neither as critical nor as crucial as it once was.
For example, even the past Iranian role as a secondary source for Armenian natural gas imports is viewed as less important by Yerevan. In fact, Iran is no longer seen as a welcome and much-needed alternative to Armenian over-dependence on subsidised Russian gas imports. Instead, it has already initiated negotiations with Turkmenistan for gas imports earlier this year and is pursuing a longer-term plan for even buying gas supplies from Azerbaijan itself. The potential for Armenian energy imports from Azerbaijan has also become a much more serious opportunity and prompted a December 5 agreement with Georgia to forfeit transit fees in any first shipment of Azerbaijan oil to Armenia.
But the fourth challenge to Iran arises from another source: Azerbaijan. A long-time partner and even ally of Israel, Baku will offer a tempting platform for renewed pressure on Tehran. Such a scenario of power projection from Azerbaijan is not limited to military co-operation with Israel but perhaps also a campaign of Azerbaijani assertiveness in the Caspian Sea. The presence of a significant ethnic Azeri minority in northern Iran is another complicating factor.
Thus, Iran is facing a new, profoundly expanded threat environment. There is always the danger that a country which feels itself defined by an underlying possibility of encirclement and the abrupt insertion of a rival power’s role, might engage in an over-reaction, including provoking its neighbours or even targeting nearby western interests in the South Caucasus. After all, there is a precedent for such concern, as in the December 2020 Israeli warning to its citizens to avoid Georgia and Azerbaijan due to threats from Iran. It is this potential response from Tehran that may yet undermine the still-fragile post-war “peace” between Armenia and Azerbaijan.
