Iran and Azerbaijan, its northwestern neighbor, have been through the full cycle of geopolitical emotions over recent years. Menacing military maneuvers and a threatened severance of diplomatic relations were followed by tendrils of discussion. Now, these have blossomed into a full-blown flowering of rapprochement.
So has the pendulum stopped? Don’t bet on it; the two countries still have huge issues to resolve.
In July, Azerbaijan reopened its embassy in Iran, completing the ongoing reconciliation between the neighbors after three years of strained relations. This rapprochement follows a series of events that nearly severed diplomatic ties when in early 2023, a violent attack on the Azerbaijani embassy in Tehran resulted in casualties. Azerbaijan responded by halting its diplomatic operations in the Islamic Republic.
The two countries’ presidents spoke following the election of Iran’s Masoud Pezeshkian. They agreed each would visit the other, while exchanging warm sentiments, and expressing “confidence that Azerbaijan-Iran relations based on common religious and cultural roots, friendship and brotherhood would continue to expand.”
Efforts to improve ties were underway even before the death of Iranian President Ebrahim Raisi in a helicopter crash in northern Iran in May. The Iranian and Azerbaijani foreign ministers have been speaking and have held face-to-face meetings, and the two countries also announced the construction of a joint storage dam on the Aras River, which serves as a common border. This was followed by a May meeting when the countries inaugurated a hydropower facility on the same river.
Both countries stand to gain from improving relations. One major incentive is the International North-South Transport Corridor (INSTC), which runs from Russia’s Baltic and Caspian ports to Iran and India, and relies on Azerbaijan as a key transit area.
While alternative routes exist, Azerbaijan is key to the growth of traffic. The expansion of the corridor is shown by recent statistics revealing that trade between Russia and Iran has grown by 48% in the first four months of 2024 compared to the previous year. Growth has also been reported in Azerbaijan-Russia and Azerbaijan-Iran commercial ties.
Progress has also been made on the Rasht-Astara railway, the remaining link needed to connect the railway systems of Iran and Azerbaijan. The reconciliation aligns with Iran’s broader foreign policy objectives of fostering friendlier relations with neighboring countries, as evidenced by its reconciliation with Saudi Arabia in March 2023 and similar efforts with other Arab nations of the Persian Gulf.
But there’s quite a lot of buts.
Iran remains concerned that Azerbaijan’s victory in the conflict over Nagorno-Karabakh war has shifted the regional balance of power. Armenia’s defeat was a boon for Turkey, which is now keen to open the Zangezur corridor, which would stretch from its borders through Azerbaijan’s Nakhchivan exclave, across Armenia and onto the rest of Azerbaijan. This runs east-west across Armenia’s north-south transport links to Iran. This is a serious strategic issue since a hostile power could sever Iran’s land link to much of Armenia, its ally.
The issue of Israel too remains especially problematic. As tensions between Tel Aviv and Tehran grew even before the war in Gaza, Azerbaijan’s closer energy and security ties with the Jewish state served as a serious irritant to Tehran. Not only has Israel supplied critical arms for the Nagorno-Karabakh war, but it reportedly gained access to Azeri air bases in the 2010s. Meanwhile, Iran’s security establishment, deeply embarrassed by the assassination of Hamas’s political leader in Tehran in July, has good reason to fear the extraordinary work of Israel’s spy networks inside the country.
Some hint of this emerged when it was reported that President Pezeshkian allegedly suggested the targeting of Israeli assets in Azerbaijan as a way to avenge the killing of the Hamas leader. Israel has ordered what it termed off-duty personnel to leave Georgia and Azerbaijan. Baku promptly denied any Israeli military presence.
There is no public suggestion that the Iran-Azerbaijan rapprochement will have any effect on Baku’s relations with Israel. Instead, Iran is more likely to acknowledge regional realities. With Azerbaijan reclaiming Nagorno-Karabakh in September, Iran needs to adapt to find common ground with its stronger neighbor. This is especially true at the time when Iran’s focus has shifted to Gaza and Lebanon, where rivalry with Israel may be reaching a dangerous tipping point; this requires the diversion of massive diplomatic and economic resources.
For Azerbaijan, improved relations with Iran may help to balance its strained relations with Western countries like France, which is supplying arms to Armenia, and with the European Union (EU) more broadly.
Both nations share an interest in limiting non-regional influence in the South Caucasus and both express support for the so-called 3+3 initiative, involving the three South Caucasus countries plus larger neighbors Russia, Iran, and Turkey.
Since the end of the Soviet Union, the relationship between Iran and Azerbaijan has been a mix of cooperation and tension. Nevertheless, the present reconciliation appears to be on solid ground for now at least.
Regional projects and wider instability in the Middle East are pushing the two countries closer. Neither can afford tense relations when each has far more pressing issues to deal with: peace with Armenia, in the case of Azerbaijan, and long-term and rising tensions with Israel, in the case of Iran.
Emil Avdaliani is a professor of international relations at European University in Tbilisi, Georgia, and a scholar of Silk Roads.
Europe’s Edge is CEPA’s online journal covering critical topics on the foreign policy docket across Europe and North America. All opinions expressed on Europe’s Edge are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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