Azerbaijan, Iran, Move Closer To Military Conflict

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Serious implications for the INSTC and routes from the EU to Asia

By Chris Devonshire-Ellis

The recent terrorist attack on the Azerbaijani Embassy in Tehran, in which Embassy staff were killed, has moved the two nations closer to war. Such an event would damage the International North-South Transport Corridor (INSTC) and close off the Caspian Sea routes from Azerbaijan’s Baku Port to Iran’s Caspian Ports, which provide Gulf and South Asian access to goods from Europe. It would compress EU trade with Asia to just the Suez Canal option and probably limit access to the Middle Corridor via Kazakhstan.

The tensions between the two countries have been accumulating with numerous component parts. One of these is related to the Azerbaijani minority living in North-West Iran, numbering about 25-35 million ethnic Azerbaijanis in the country. The Azeri President, Ilham Aliyev said in December 2022 that Iranian Azerbaijanis are “part of our nation.”

Another important issue is Azerbaijan’s foreign policy ties. Baku works closely with Iran’s main enemy – Israel. In just 10 months of 2022, the trade turnover between Azerbaijan and Israel amounted to US$1.2 billion, partially as a result of the Abraham Accords. Baku supplies Israel with oil and refined products, and buys hi-tech weapons – dual-use electronics, attack and reconnaissance drones, navigation and optics systems, precision-guided munitions. More recently, the two nations have formalized this relationship, with mutual trade representation offices opening. The Azerbaijani Government has also announced the opening of an embassy in Tel Aviv.

In Iran, Israel ‘s activity is treated with hostility. Azerbaijan borders Iran by land and the Caspian Sea, which Iran regards as a potential corridor for Israeli special operations forces to use as a springboard to launch attacks on Iran. Theoretically, Israel could use Azerbaijan’s territory to deploy drone operators, refuel its fighter jets, and to use as a base for sabotage groups. A weakened Iran would potentially allow Azerbaijan to claim two Iranian Provinces – West and East Azarbaijan. and potentially, Ardabil.

Iran and its Provinces

Another controversial issue is the Zangazur corridor project. Azerbaijan wants to lay a direct road to the Nakhichevan exclave and extend this further to Turkiye. The route would pass through the Syunik region of Armenia. The implementation of the project can cut off Iran from Armenia, and therefore interfere with Tehran’s trade with the EAEU countries.

In addition, the construction of the corridor will lead to further strengthening in the Turkish region. Iran has a lucrative free trade agreement with the EAEU and this project would potentially hinder what have been growing trade volumes.

Iran’s concern increased after large-scale clashes took place on the border between Azerbaijan and Armenia (outside of Karabakh) in September 2022. Baku has shown that it is ready to resolve the issue by force. Tehran said at the time that it would not tolerate border changes. The opening of an Iranian consulate in the administrative center of the Syunik region, the city of Kapan, was visible evidence of Armenia’s support. In response, the Armenian Foreign Ministry promised to open its consulate in the city of Tabriz, which is considered the capital of Iranian Azerbaijanis.

After that, Iran and Azerbaijan began to flex their muscles. In October-November last year, Baku and Tehran held army exercises in the border areas and exchanged harsh statements. Iranian MP Mohammad Safai explained that the moves were a message to all ill-wishers. According to him, any action against the Islamic Republic “will cost the enemies dearly.” Azerbaijani President Ilham Aliyev said that Baku was forced to start exercises “to show that we are not afraid.” “We will do our best to protect our way of life, the secular vector of development of Azerbaijan and Azerbaijanis, including Azerbaijanis living in Iran.” he said. This echoes the Russian position concerning ethnic Russians living in East Ukraine.

What Happens Next?

Various regional experts had assessed the prospects for Iranian-Azerbaijani relations differently. Interviewed in Izvestia, Vladimir Novikov, head of the Caucasus department at the Institute of CIS Countries, says that Baku is becoming more and more active. “After the Second Karabakh War, in which it defeated Armenia in 2020, Azerbaijan has felt its strength. It now acts actively, even aggressively. It enjoys the support of Turkiye and is increasingly asserting its rights and claims. Tehran is also worried about the fate of its own Azerbaijanis: the stronger Azerbaijan, the closer its ties with Turkey, the higher the threat of separatism inside Iran.”

Novikov believes that relations between the two countries will continue to deteriorate: “Perhaps, all contacts between Baku and Tehran will be broken. I do not rule out a military escalation. As an option – a clash on the Iranian-Azerbaijani border in the Nakhichevan region.”

Vladimir Sazhin, a researcher at the Center for the Study of the Countries of the Near and Middle East says that Iran has been weakened by a powerful wave of protests. “Probably, Baku and Ankara believe that Tehran is not in a position to dictate its will in the South Caucasus. I do not think that it will come to a direct military clash. But the ideological and propaganda wars will take on ever sharper forms.”

Alexander Skakov, Deputy Director of the Institute of Oriental Studies of the Russian Academy of Sciences says that the prospects for bilateral relations depend on the general situation in the region and in the world. “We see clouds gathering over Iran. There is evidence that the protests in the country were provoked from outside; at the end of January, drone strikes were carried out in Iran. Tehran suspects that Israel was involved from Azerbaijani territory. A further aggravation of the situation cannot be ruled out. If it happens, then Azerbaijan can join the broad international anti-Iranian coalition. I do not predict one-on-one clashes between Baku and Tehran. But both countries have strong instincts for self-preservation.”

The United States will have a vested interest in seeing Iran lose a conflict with Azerbaijan and would be supportive of regime change. Should Iran lose territory as a result it is unlikely the United States would care very much. Shorter term, there would be significant disruption to European trade East, resulting in higher prices along all markets of the INSTC and Middle Corridor. Longer term, if regime change in Tehran is effected, then the INSTC corridor will come under a larger degree of Western influence – an optimum outcome for the EU and United States. How this would impact Russian trade would depend upon the makeup of any future Iranian government, and their position as regards sanctions and the desirability of relations with Russia.

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