On 10 November 2020, Armenia and Azerbaijan signed a "comprehensive ceasefire agreement" under Russian overt sponsorship and with tacit Turkish support, after the bloody battles that took place between the forces of the two countries in the Nagorno-Karabakh region, which has been disputed between them for nearly thirty years. Within six weeks, Azerbaijan managed to control nearly 30 percent of the region’s territory.

While most of the analyses focused on what Armenia’s defeat and Azerbaijan’s victory meant for both Turkey and Russia, evidence has shown that Iran is the biggest loser in this conflict, considering that the terms of the ceasefire agreed upon between Baku and Yerevan constitute a serious threat to Iran's long-term strategic interests.

The geopolitical implications of the Azerbaijani-Armenian agreement for Iran

The most important of those implications are the following:

1. Decline in Iran's historical regional status in the Caucasus

For historical reasons, Iran considers itself eligible for a special status in the South Caucasus, considering that both Armenia and Azerbaijan were part of the Persian Empire. However, the results of the recent war between Azerbaijan and Armenia weaken Iran's role in the Caucasus, enhancing instead the role of the two historical rivals, namely Russia and Turkey, as well as the modern enemy Israel.

On the one hand, while Russia and Iran have recently maintained good relations, they have been competing powers in the region for centuries. While Moscow's position on the crisis was from the beginning characterised by providing tepid support to Armenia and its Prime Minister Nikol Pashinyan, due to his policies aimed at rapprochement with the West, Moscow has been keen to maintain its influence in the region by providing peacekeepers in Karabakh and along the proposed Nakhchivan-Azerbaijan Corridor, by assigning the task of protecting security and peace to Russian special forces that would be deployed at all border crossings and vital corridors. Moscow would also be happy to see the end of the role of Prime Minister Pashinyan, whose political career now appears to be drawing to a close. It also appears to be guided by its broader goal of ensuring that Turkey stays outside the Western orbit.

On the other hand, Turkey will maintain troops in Azerbaijan, and now has direct access to the Caspian Sea via the proposed Nakhchivan-Azerbaijan Corridor. It can now also exert direct influence on Central Asia, one of President Recep Tayyip Erdogan's leading ambitions. Ankara has long been seeking to use the Nakhchivan Corridor for geopolitical purposes, by quickly announcing Ankara's plans to build a railway to Nakhchivan after the 10 November 2020 agreement.

On a third front, it is no secret that Israel and Azerbaijan have established substantial cooperation in the field of intelligence, energy and military affairs, and that Azerbaijan is one of the largest buyers of Israeli weapons. Indeed, Azerbaijan's victory in the recent war against Armenia would lead to the expansion of the Iran-Azerbaijan border by nearly 130 kilometres. If Israel intends to launch air strikes on Iranian nuclear facilities, Azerbaijan is likely to play a vital role in this context, either as a refueling stop or as a starting point.

2. Opening a new front in the strategy of containing Iran through crises

Part of the Azerbaijani-Iranian border has been under Armenian occupation since 1994. Now that this border has returned to Baku’s control, new security dynamics have arisen between the two countries. Besides, the presence of 2,000 Russian peacekeepers now, just 100 kilometres away from the Iranian border, is bound to make many in Tehran anxious. Iran has already begun to deploy more military assets along its northern border.

Regardless of the ancient and long-standing historical, religious and linguistic ties between Iran and the Caucasus, there are 800 km of border lines connecting Iran to this region. Besides, the Iranian Ardabil and East Azerbaijan provinces share common borders of 369 km and 200 km respectively with the Republic of Azerbaijan. Therefore, Iran will have to devote time, resources and forces to adapt to the emerging geopolitical reality along its northern border with Azerbaijan, which may mean less focus by Iran on other places such as the Gulf, Iraq, and Syria.

3. Rising demands of the Azeri minority in Iran

Iran’s Azeri minority accounts for one-third of its population of 84 million people. Judging by their nationalist views centred on Persian, Iranians believe that awakening and empowering the Azerbaijanis pose as a serious threat to national security and national unity in Iran. With the rise of the nationalist rhetoric in Azerbaijan as a result of the recent victories in Karabakh, Iran fears that the Azerbaijani nationalist mood may extend to calls for the unification of Greater Azerbaijan, especially in view of the clear sympathy by many Iranian Azeris with the state of Azerbaijan in its recent conflict with Armenia.

While separatist positions may presently be illogical, in view of Iran's still-fresh memory and awareness of the unitary pressure led by Azerbaijan in the 1990s, it is not in Iran's national security interests to deal with the powerful, rich and attractive Azerbaijan, which could affect the Azeri minority and enhance its desire for separation from Iran in the future.

4. Decline in the Iranian regime's popularity at home

During the recent conflict, Tehran played a secondary role in the course of the war. Indeed, Tehran could not have had a say in shaping the outcome that might contribute to reviving memories of the two Russo-Persian wars in the nineteenth century. It was revealed to the Iranian people that their country no longer possesses the economic power, technological development, or tempting political model to influence a region that had been under Persian influence since the time of the Achaemenid Empire (550-330 BC). Psychologically, this is likely to affect the Iranian people's view of their regime, which constitutes another blow to Iran's self-image as a regional hegemon. All in all, this constitutes yet another affront to the legitimacy of the regime that has ruled Iran since 1979.

5. Economic losses due to the decline in transit trade with Azerbaijan

For decades, Azerbaijan has maintained friendly relations with Iran to supply the autonomous region in Nakhchivan. Iran has even supplied the region with natural gas. However, the new Karabakh agreement has ended Iran's role as a communication bridge between Azerbaijan and Nakhchivan, reduced Azerbaijan's dependence on Iran for access to the high seas, and created a new opportunity for Azerbaijan to access the high seas via Turkey. This has already raised concerns in Tehran because it could actually cut off Iran's access to Armenia and onwards to Europe via Georgia, while reducing the ability to transport Iranian gas to Europe.

The future of the Iranian role in the Caucasus

Given the numerous problems currently afflicting Iran, especially in the light of the US economic sanctions, as well as the repercussions of the coronavirus pandemic, and Tehran's costly and never-ending interventions in places such as Syria, Iraq and Yemen, the last thing Tehran needed was to see a change in the positive situation it has been enjoying in the South Caucasus over the past three decades.

Therefore, Iran's options in the face of the new developments in the Caucasus seem limited, especially if the following considerations are taken into account:

  1. Iran does not have the potential to seek to sabotage the agreement by increasing cooperation with third parties that may be harmed by Azerbaijan’s recent victory, particularly Armenia itself which is subject to internal political shocks as a result of the historical defeat against Azerbaijan.
  2. Iran does not seem to have the intention to get involved in an adventure or gamble to antagonise Turkey and Russia on other regional issues at present, given the policy of "maximum pressure" that continues to be practised by President Donald Trump's administration against Iran until the last moment, despite that administration’s defeat in the US elections.
  3. Iran's attempt to cope with the agreement’s repercussions and reduce its losses will be the most likely option, at least in the foreseeable short term, pending the possibility of improvement in Iran's regional situation, especially in the event that the US, under the administration of President-elect Joe Biden, returns to the nuclear agreement, and perhaps pending potential failures in the implementation of the recent agreement between Baku and Yerevan, especially in the light of the logistical complexities that will surround the process of its implementation on the ground and the emergence of the "devil in the details" within the agreement.

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