A Status Quo Power in a Changing Region: Iran’s Regionalism in the South Caucasus

Abstract

Following the 2020 Karabakh War, the emerging geopolitical realities compelled Iran to recalibrate its South Caucasus policy, prompting a shift away from its longstanding posture of neutrality. Despite the potential for Tehran to engage in cooperation through proposed regionalist projects by other actors, a significant shift towards regionalism in Iran’s approach to the South Caucasus remains elusive. This article delves into two primary sets of factors to understand the reasons behind this absence of regionalism in Iran’s foreign policy towards the South Caucasus. The first set encompasses general approaches in Iran’s foreign policy and the impact of domestic political dynamics on their development. It discusses Iran’s perceived impossibility of aligning with the South Caucasus states, the absence of a robust neighborhood policy, and Iran’s strategic isolation in the region, attributed to its unique political system and the ideological stance of its ruling elite. The second set examines external dynamics, including constant international pressure on the Islamic Republic, Iran’s deep-seated ideological and security attachment to the Arab Middle East, and the fluctuating nature of Tehran’s relations with the West. Collectively, these factors significantly limit Iran’s capacity to craft a coherent strategy for regional integration in the South Caucasus.

Introduction

The Second Karabakh War of 2020 between Azerbaijan and Armenia reshaped the regional power dynamics in the South Caucasus that had been in place since the end of the Cold War. The war has paved the way for a new regional order, influenced by evolving geopolitical and geoeconomic realities. Over the past four years, the established post-Soviet equilibrium in the region has been significantly disrupted, even as a new structure is yet to be fully formed. Beyond the prevailing uncertainties, this situation has highlighted the increasing importance of local actors and the intensification of region-specific dynamics in reshaping the South Caucasus. A critical outcome of these developments is the move towards regional cooperation and competitive strategies, which are redefining the geopolitical landscape of the region. Within this context, the expanding roles of Turkey and Israel, in partnership with Azerbaijan, have notably increased the strategic concerns of Iran.

The fragile state of security arrangements in the South Caucasus, alongside unresolved conflicts in South Ossetia, Abkhazia, and Nagorno-Karabakh, has propelled the region’s neighboring powers to adopt diverse strategies to further their regional interests and avert security threats. Among these powers, Iran’s strategy since the 1990s has centered on preserving the status quo in the South Caucasus while fostering local initiatives aimed at resolving regional conflicts. The rationale behind Tehran’s emphasis on the “local” nature of potential settlements stems from its concern over the involvement of trans-regional powers, which it fears may heighten tensions between conflicting parties, potentially leading to instability spilling over into Iranian territory. During the 2020 Karabakh war, Iran’s Supreme Leader, Ayatollah Seyyed Ali Khamenei, underscored the importance of ending the war, warning that external intervention could exacerbate the conflict (Khamanei 2020). In response, Iran has advocated for a 3+3 regional format as an effective framework that would include the three South Caucasus countries alongside the three neighboring powers: Russia, Iran, and Turkey. With substantial experience in cooperating towards conflict management in Syria, the three founders of the “Astana Format,” that is, Moscow, Ankara, and Tehran, have sought to apply similar collaborative approaches in the South Caucasus. Nevertheless, Iran’s failure to achieve its objectives has further complicated its position, leaving it exposed to Turkey’s burgeoning regional ambitions (Azizi and Isachenko 2023, 2).

The ceasefire agreement after the 2020 Karabakh war between Baku and Yerevan further highlighted Iran’s vulnerable position amidst the shifting geopolitics of the South Caucasus. While Russia and Turkey played decisive roles on the ground and through diplomatic channels, Iran found itself sidelined in the region’s emerging geopolitical dynamics. Since then, Iran has sought to adjust its regional priorities to align with the new realities. Viewing the Nagorno-Karabakh developments through a wider Eurasian lens, Iran considers the South Caucasus’ strategic connection to both the Caspian Sea and Central Asia on the one hand, and the Middle East on the other. Over the past decade, Russia and Turkey have expanded their influence in the region, positioning the South Caucasus as a key element within a larger geopolitical chessboard extending from the Mediterranean to the Caspian Sea (Stronski 2021). Faced with these new geopolitical trends, Iran is attempting to redefine its regional role accordingly.

However, despite the abundance of risks and interests in the South Caucasus, Iran’s foreign policy has exhibited a notable lack of strategic vision towards regionalism in the region. This gap stems from two main factors. Firstly, domestic considerations, including Iran’s challenges in finding common ground with South Caucasus states, the absence of an effective neighborhood policy, and its regional isolation due to its distinct political ideology and system, have limited its engagement in regional cooperation dynamics. Secondly, external pressures, including ongoing international sanctions, Iran’s significant ideological and security preoccupations with the Arab Middle East, and its deteriorating relations with Western powers, have impeded Tehran’s ability to project its geopolitical influence or formulate a strategy for regional integration. These issues collectively explain Iran’s difficulty in embracing a regionalist approach in its foreign policy towards the South Caucasus.

Regionalism in Iran’s foreign policy

The Islamic Republic of Iran’s foreign policy has been characterized by a constant debate between regionalism and globalism. Iran is situated adjacent to five regional subsystems: the Persian Gulf, the Middle East, Central Asia, the South Caucasus, and the Indian subcontinent. Its unique geographical position at the confluence of these subsystems has made the country susceptible to the shifting power dynamics in the surrounding regions. This location could offer Iran a critical advantage — the potential to act as a strategic bridge connecting Asia with Europe and Africa. However, throughout its modern history, Iran has struggled to establish any long-lasting and stable alliances with its neighbors. Being bordered by 15 countries, some of which face recurring instability, has fostered a persistent perception of threat and vulnerability. Following the 1979 Islamic Revolution, antagonism towards the USA and Israel introduced new geopolitical fault lines, further intensifying Iran’s threat perception from its neighboring regions.

Since 1979, the foreign policy priorities of Iran have been shaped increasingly by an anti-imperialist approach that opposes the material and normative structures of the international system. As a revisionist state, Iran has set ambitious objectives in its foreign policy that are often not only beyond its actual capabilities but also overlook potential repercussions from the international community (Golmohammadi 2019, 94). Mohiuddin Mesbahi (2011) notes that the Islamic Republic has attempted to carve out a distinct strategic space for itself, where systemic power calculations are disregarded. Post-revolutionary Iran, driven by ambitious aims and sheer willfulness, and leveraging its geographical centrality, views the international system as a domain where rules do not hold central importance. Consequently, Iran has neglected the power distribution and the effects of systemic pressures, leading it to forsake a long-term strategic alliance with the USA without forming alliances with fellow revisionist states. This mindset has resulted in Iran, once a key actor at the intersection of regional and international developments, opting for strategic loneliness. This strategic loneliness, stemming from the revolution and hostile relations with the USA, represents a significant foreign policy challenge for the Islamic Republic. In the absence of significant alliances with major powers, strategic isolation has emerged mainly due to systemic pressures, indicating that domestic developments alone cannot significantly alter this challenge (Mesbahi 2011, 15–18). Thus, Iran has found itself in a state of being strategically “lonely,” both by design and by default, lacking meaningful alliances and opportunities to align with great powers.

The geographical circumstances mentioned above, with Iran positioned at the nexus of multiple regional subsystems, combined with its unique religious and cultural identity — being Persian and Shiite in a predominantly non-Persian and Sunni regional context — have offered the potential for Iran to play a role across different neighboring regions. Yet, these same factors have also imposed strategic constraints, as other actors seek to limit the Islamic Republic’s regional influence (Barzegar 2019, 188). Mahmoud Sariolghalam (2005) proposes the concept of “the impossibility of making coalitions” in Iran’s foreign policy, highlighting the divergences between Iran and its neighboring regions. According to Sariolghalam, the ideological nature of Iran’s ruling system and its foreign policy objectives, particularly its support for Islamic movements abroad, inevitably lead to conflicts with the Arab world (Sariolghalam 2005, 18–26). Additionally, the characteristics of Iran’s economic and cultural systems differ from those of its northern and eastern neighbors, thereby not providing a suitable basis for regional cooperation and convergence.

Proponents of a globalist perspective on Iran’s foreign policy argue that to enhance Iran’s regional stature, it is crucial to de-escalate tensions with the West, especially the USA, which represents a global hub of capital and technology. They point to ideological differences, disparities in the nature of power and politics, as well as social and ethnic conflicts with neighboring countries, as reasons why any regionalist approach in Iranian foreign policy is doomed to fail (Sariolghalam 2005, 117–121).

Conversely, the regionalist perspective asserts that, positioned at the heart of various high-risk subsystems, Iran must prioritize active involvement in neighboring regions, particularly the Arab Middle East. Kayhan Barzegar suggests that the main elements of Iran’s national power, such as a robust nation-state, strategic geographical location, and a potent ideology, grant it a prominent status in the Middle East. Iran’s strategic significance is underscored by its central role in regional developments in the Middle East, which are closely linked to the changing global security system following the 9/11 events. Therefore, a focus on regionalism in Iran’s foreign policy is deemed essential for its security and national interests over the long term (Barzegar 2010, 32–35).

Three primary approaches can be identified within the regionalist perspective of Iran’s foreign policy: the security-geopolitical approach, the geoeconomic approach, and the cultural-civilizational approach. Given Iran’s varying priorities and interests across different neighboring regional subsystems, the Islamic Republic’s main challenge over the past four decades has been to strike a balance among these approaches. Echoing a similar viewpoint, Ruhollah Ramezani (2004) contends that balancing geopolitics and ideology represents a principal foreign policy challenge for Iran. From an empirical standpoint, each of these regionalism approaches has evolved through historical milestones. During the Shah’s era (1941–1979), Iran, because of its strategic ties with the West, avoided pursuing conflicting ideological interests within its vicinity. At that time, Iran’s regional focus was primarily on the Persian Gulf, adopting a geopolitical and geoeconomic rationale (Barzegar 2010, 38). The absolute dominance of the Soviet Union over Central Asia and the South Caucasus precluded Iran from adopting a civilizational approach in its foreign policy towards those regions.

The 1979 Islamic Revolution heralded a new era, prioritizing an ideological approach in shaping Iran’s foreign policy towards its neighboring regions. Actions such as opposing Western involvement in the Muslim world affairs, supporting the Palestinian cause against Israel, backing Islamist groups across the Arab world, and organizing Shiite movements in the Arab Middle East were ideologically driven, transforming Iran into an active regional player. Following the eight-year conflict with Iraq, then President Akbar Hashemi Rafsanjani’s pragmatic administration initiated diplomatic outreach to neighboring countries. This strategy, motivated by the necessities of post-war economic reconstruction in Iran, sought to enhance economic relations with neighbors. The subsequent collapse of the Soviet Union, opening Central Asia and the South Caucasus to neighboring powers, prompted Tehran to amalgamate civilizational, economic, and security approaches in its policy towards its newly independent northern neighbors (Barzegar 2003, 17–18). On the one hand, Tehran, adopting a civilizational-cultural approach, aimed to cultivate relations with these countries, many of which have longstanding historical connections with Iran. On the other hand, from a geopolitical-security perspective, Iran endeavored to recalibrate its foreign policy to counterbalance the influences of Turkey and Russia in those regions.

Over the past two decades, the escalation of tensions with the West, particularly the USA, has profoundly influenced the regionalism of Iran’s foreign policy. The US-led invasions of Afghanistan in 2001 and Iraq in 2003, especially after President George W. Bush labeled Iran as part of the “axis of evil,” fundamentally altered Iran’s security environment, prompting Iranian leaders to reassess and redefine their regional priorities. From this period forward, the Arab Middle East regained prominence in Iran’s foreign policy, with the geopolitical-security approach assuming a dominant role in Iran’s regional strategy. The Arab Spring developments of 2011 presented another pivotal moment, paving the way for Iran’s expanded involvement in the turbulent geopolitics of the Middle East. Iranian leaders, particularly Khamenei (2011), have frequently highlighted the strategic importance of the Levant and Iraq as Iran’s “strategic depth.” These regions are crucial for Iran’s efforts to shape security arrangements and oppose any US-led or initiated regional order. This renewed focus on the Arab Middle East underscores the geopolitical-security approach in Iran’s regionalism while diminishing attention to other regions, notably Central Asia and the South Caucasus. Additionally, the conflict between Iran and the US-Israeli axis has extended beyond the Arab Middle East, affecting other neighboring regions.

In the past decade, debates have intensified regarding the apparent lack of effective regionalism in Iran’s foreign policy. This deficiency is primarily attributed to the absence of a problem-based, regionally-oriented neighborhood policy in Iran (Azizi et al. 2020, 154–157). Despite official statements, Iran’s foreign policy in practice does not prioritize its neighbors, and relations with neighboring countries have been significantly influenced by the state of Iran-West tensions at any given time. At the operational level, the challenges in fostering relations with neighbors are largely due to the conflict between the Islamic Republic and the USA, rather than bilateral issues between Iran and any particular neighbor (Golmohammadi 2019, 96). Hence, fluctuations in Iran-US relations directly impact Iran’s interactions with its neighbors. For example, American sanctions against Tehran have severely reduced trade volumes between Iran and Turkey, declining from $10 billion in 2016 to $5.6 billion in 2019, and further to $3.3 billion in 2020 (OEC 2022). This period coincided with former US President Donald Trump’s “maximum pressure” campaign against Iran. Indeed, pursuing active regionalism under systemic pressure poses a challenge for a middle power like Iran, which faces numerous issues with global powers. President Ebrahim Raisi’s administration has attempted to establish a neighborhood policy independent of sanctions and the conflict with the USA (Amir Abdollahian 2022). However, the reality is that the Islamic Republic needs to normalize its relations with the West in order to facilitate economic and political convergence with its neighbors and play an active role in the neighboring regions.

Another dimension of the lack of strategic relations with neighbors has to do with how neighboring countries position themselves in response to systemic pressures against Iran, especially Western sanctions. Indeed, there has always been a cost-benefit analysis among these states when formulating their policies towards Iran. In the past, Iran attempted to form strategic alliances with some neighboring countries, particularly within the framework of the Baghdad Pact — later the CENTO treaty. However, the international and regional contexts of that era have drastically changed. Currently, forming a strategic alliance with neighbors is not feasible, primarily due to divergent threat perceptions. Iran’s threat perception has maintained an international and regional focus, which has been more or less consistent over the last 40 years. Within this context, the USA is viewed as the primary source of threats, and Tehran has continuously sought to foster relations with non-Western global powers that could support Iran against the West. Here, only two candidates emerge, namely, Russia and China. Neighbors do not qualify as candidates for forming a counter-hegemonic coalition, and given the amicable relations most of Iran’s neighbors have with the West, none would be considered a suitable candidate in the first place.

Nevertheless, following Trump’s decision to withdraw from the Iran nuclear deal (JCPOA) in May 2018 and initiate the maximum pressure campaign against Iran, regionalism began to garner more attention within the context of the “Look to the East” strategy in Iran. Proponents of this strategy, which is also endorsed by the current administration of President Ebrahim Raisi, argue that developing relations with countries in East Asia, Eurasia, and Southeast Asia represents the most effective mechanism to counteract the hostile policies and pressures imposed by the West. Khamenei, the strategy’s chief advocate, stated, “the foreign policy of preferring the East over the West, preferring neighbors over distant countries, is one of our priorities today” (Khamenei 2017). In the framework of the Look to the East policy, Iran aims to establish strategic relations not only with China, Russia, and India but also to strengthen ties with its neighbors, including those in Eurasia. However, the conceptualization of “the East” in Iran’s foreign policy suggests that it is viewed as an ideological alternative to the Western-led international system, rather than a purely geographical notion. Thus, Iran’s shift towards the East in its foreign policy appears to be driven more by its problematic relations with the West than by an independent strategic approach.

According to Mehdi Sanaei and Jahangir Karami (2021, 27–29), the Look to the East strategy was developed in response to both Western pressure and the evolving global and regional conditions. The Look to the East approach represents a multifaceted strategy within Iran’s regionalism in a transitioning international system. Geopolitically, Iran is not only a major actor in the Persian Gulf and the broader Middle East but also serves as a bridge between those regions and South Asia, Central Asia, and the South Caucasus. This complex regional position places Iran in proximity to India, China, and Russia. From a geoeconomic perspective, economic power is shifting from the West to the East, with East Asia, particularly China, emerging as the principal driver of global economic growth. This shift holds significant importance for Iran in terms of transit routes, energy exports, and its potential role in the regional and global economy. For the first time in over a century, Eastern countries have become Iran’s main economic partners, with China and India leading the way. Moreover, on the broader geostrategic landscape, great power competitions are unfolding in three regions: the Euro-Atlantic region, centered around the USA; the post-Soviet space, centered around Russia; and East Asia, centered around China. Consequently, other regions, such as the Middle East, no longer play a pivotal role in the dynamics of the international system. This situation underscores the importance of diversifying regionalism and forming strategic partnerships with emerging Eastern powers as strategic priorities for Iran’s foreign policy.

Iran’s foreign policy in the South Caucasus

Historical and cultural ties, along with a long shared border with the region, provide Iran with significant potential to expand its influence in the South Caucasus. The strategic significance of the South Caucasus in great power politics, especially within the evolving geopolitical context of Eurasia, has rendered war, conflict, and rivalry between regional and global powers a consistent characteristic of the region. Historically, parts of what is today the South Caucasus were annexed by the Russian Empire from Iran in the 19^th century, and Iran has had numerous geopolitical confrontations with both Russia and Turkey (then the Ottoman Empire) in the region. In the collective perception of the Iranian political elite of the country’s historical and cultural “strategic depth,” Iran has always been viewed as an indispensable power in the South Caucasus. However, since the 1828 Treaty of Turkmenchay, Iran has generally adopted a passive and defensive policy towards the geopolitical dynamics in the South Caucasus. During Soviet dominion over the South Caucasus, Iran was as concerned about potential Soviet encroachments on its territory as it was about the spread of Communist ideology near its borders. This stance persisted even after the Islamic Revolution in Iran, which was primarily anti-Western, until the Soviet Union collapsed in 1991 (Paul 2015, 53).

The collapse of the Soviet Union and the dismantling of Cold War-era structures lessened Iran’s threat perception from its northern neighbors, presenting Tehran with an opportunity to adopt a more active role in the geopolitics of the South Caucasus. For the first time since the early 19^th century, Iran began to develop an active approach towards Central Asia and the South Caucasus. However, despite this geopolitical opening, factors such as Russia’s dominant role, the Iran-West confrontation, American efforts to isolate Iran, and Ankara’s pan-Turkist policies led Iranian leaders to take a more cautious and pragmatic stance towards developments in the South Caucasus. Compared to the other two regional powers, Iran’s policy in the South Caucasus since 1991 has focused on maintaining the status quo rather than on expanding its zone of influence (Tishehyar and Bahrami 2018, 27). At the official level, Iran has declared the development of relations with the countries of the South Caucasus as a major foreign policy goal. However, in practice, Iran has been more of an observer of strategic trends and dynamics in the South Caucasus over the past three decades and has not played a significant role in shaping the security arrangements and geopolitical order in the region.

The diverse and sometimes contradictory perceptions that regional countries and trans-regional powers have had of Iran’s regional goals and behavior have led to varied outcomes in their policies regarding Iran’s role and position. In the early 1990s, the prevailing view was that the Islamic Republic aimed to export its revolution to neighboring regions. This perspective generated a strong sense of threat among the secular states of Central Asia and the South Caucasus. Shireen Hunter (2010, 76–78) argues that at that time, Iranian revolutionaries sought to institutionalize an ideological tendency in their foreign policy with an idealistic approach towards developments in the South Caucasus. This was the dominant perspective in Iran’s foreign policy, which was expected to be applied to its neighboring regions as well. However, Iranian foreign policy’s track record in the South Caucasus has highlighted a geopolitical logic and pragmatic behavior in its regional policy more than ideological influences. Nonetheless, the general understanding of Iran’s confrontational foreign policy towards the post-Cold War liberal international order and its actual manifestations in the Middle East have shaped an aggressive and interventionist perception of Iran’s policy in the South Caucasus, too.

As a result, the countries of the South Caucasus have generally adopted a deterrence-based policy towards Iran, leading them to pursue a highly cautious approach towards developing relations with Tehran (Atai 2012, 132). Even though Iran has never pursued an expansionist policy as such in the South Caucasus, any Iranian engagement in the region is perceived as aggressive by the regional states. Both regional countries and Iran’s rivals in the region view Iran’s Caucasus policy as inseparable from the Islamic Republic’s overall revisionist and ideological foreign policy (Fallahi and Omidi 2018, 425).

Seyyed Jalal Dehghani Firouzabadi (2010, 215–217) argues that Iran’s foreign and security policy in the South Caucasus has been devoid of ideological considerations and is primarily driven by geopolitical and economic logic. Ideological discourse has never overridden security interests in the region. Contrary to the expectations and requisites of an Islamic discourse, Iran has formed strategic relations with Armenia and Russia and has not provided any strong support to the Shiite Azerbaijan, nor has it taken any practical steps towards exporting its Islamic Revolution to the region. Unlike the Middle East, the South Caucasus has not been considered part of Iran’s strategic depth from an ideological standpoint. In the South Caucasus, Iran has acted as a security-seeking actor, devoid of any prioritized non-security objectives.

The evolving security framework of the South Caucasus introduces fresh dynamics to Iran’s long-standing status quo approach, as the region, once characterized as a “broken region” (Waal, 2012, 1710), shifts from a system dominated by Russian security measures to a post-Russian environment that lacks indigenous integration and conflict resolution mechanisms. This change is highlighted by Azerbaijan’s rapid military campaign in Nagorno-Karabakh on September 19, 2023, leading to the swift military and political reintegration of the area. Additionally, Russia’s diminished role in resolving the Nagorno-Karabakh conflict, due to its involvement in the Ukraine conflict, has weakened its stature as a reliable security guarantor in the eyes of its Caucasian neighbors (Golmohammadi and Markedonov 2024, 158). The conflict in Ukraine has also exacerbated tensions between Azerbaijan and Armenia, encouraging Baku to adopt offensive strategies to acquire additional territory. Tehran is increasingly concerned that Azerbaijan’s strengthening relationships with Ankara and Tel-Aviv could transform it into a strategic foothold for adversarial powers aiming to extend their influence into northern Iran.

The interconnected dynamics of the conflicts in Karabakh and Ukraine offer unparalleled opportunities to navigate the interests of competing regional powers, further hastening the dissolution of the post-Soviet status quo in the South Caucasus. The decline of Russia’s dominant position in the region opens avenues for other actors, especially Turkey and China. China is emerging as a key player in regional infrastructure development, while Turkey positions itself as a potential mediator in the South Caucasus, enhancing its geostrategic influence throughout the region (Laruelle, 2022). This realignment and disintegration of the established order are raising alarms among other regional actors like Iran and Georgia, which, though not directly involved in the conflict, face the unpredictable fallout of these developments.

The constraints of Iran’s regionalism in the South Caucasus

In the post-Soviet period, Iran’s policy in the South Caucasus has been focused on preventing an all-out war and maintaining the status quo in regional conflicts, especially in Nagorno-Karabakh. However, Iran’s foreign policy towards the Karabakh conflict has seen a tactical shift since 2020. Amidst the Second Karabakh War in November 2020, Khamenei (2020) highlighted Iran’s efforts to end the war, stating that “All the territories of the Republic of Azerbaijan in Nagorno-Karabakh, which have been occupied by Armenia, must be liberated and returned to Azerbaijan.” Simultaneously, he emphasized the need to ensure the safety and security of the Armenians of Karabakh and respect for international borders. Despite Iran’s emphasis on its traditional policy of neutrality, the statements of Iranian officials during the Second Karabakh War suggested Tehran’s inclination to support Azerbaijan’s position in Karabakh. Ali Akbar Velayati (2020), Khamenei’s senior foreign policy adviser, mentioned that “the occupied areas of Azerbaijan must be evacuated and the Armenians must retreat.”

As for the reason behind the absence of an active Iranian regionalism in the South Caucasus, several security-geopolitical, economic, and ideological factors have played a role. Although the collapse of the Soviet Union created significant opportunities for regional powers to play an active role in the South Caucasus, Iran’s presence in this region has been quite limited. Apart from a partnership with Armenia, which is based on realpolitik reasons for maintaining a balance of power vis-à-vis Azerbaijan over Karabakh, Iran has struggled to develop close relations with the South Caucasus states. Iran’s foreign policy in the South Caucasus has been predominantly passive and security-oriented (Koolaee et al., 2010, 393). This approach has been influenced by hostility with the USA and international sanctions against Iran, turning the South Caucasus, like Iran’s other neighboring regions, into a scene of Iran’s isolation.

In a general assessment, confrontation with the USA has significantly influenced Iran’s bilateral relations with neighboring countries. Since 1979, Iranian leaders have often adjusted Tehran’s relations with the South Caucasus states according to their ties with the USA, rather than Iran’s national interests. A widespread conspiracy theory among Iran’s decision-makers suggests that Washington aims to weaken and eventually change Iran’s political system by infiltrating neighboring countries. According to Farhad Atai (2012, 129–130), the American factor is the most crucial in determining the patterns of Iran’s bilateral relations with each of the South Caucasus countries. For instance, Iran’s relationship with Azerbaijan under Heydar Aliyev was closer than with the western-oriented government of Abulfaz Elchibey, and relations with Georgia were better during Eduard Shevardnadze’s period than during Zviad Gamsakhurdia’s rule.

At the same time, Iran’s cultural and religious ties with the countries of the South Caucasus have not laid any foundation for developing bilateral relations. Instead, they have become a source of divergence and contributed to the security dilemma. This issue is particularly evident in Iran’s relations with Azerbaijan, a Shiite-majority country, and has led to mutual suspicion. Most of the problems in Tehran-Baku relations stem from religious and political considerations post-revolution. Iran’s ambition to export the revolution to neighboring countries has always been a concern for its neighbors, especially countries with a large Shiite population. Azerbaijan frequently accuses Iran of meddling in its internal affairs through ideological propaganda and inciting disobedience (Majidi and Zahmatkesh 2013, 131). In response, Azerbaijan has sought to counterbalance the Iranian threat by promoting ideas such as the “reunification of North and South Azerbaijan,” referring to Iran’s Azeri-majority regions, and supporting ethnocentric and secessionist sentiments among the Azeri population of Northwest Iran (Atai 2006, 61–62).

In Azerbaijan’s post-Soviet nation-building process, the Azeri/Turkic element of the nation’s identity has taken precedence. Conversely, the Shiite aspect of the Azeri identity has been marginalized and has even gradually been considered a hostile element. Iran’s support for Armenia in the 1990s fueled anti-Iranian sentiments in Azerbaijan’s society and state. Contrary to prevailing Iranian perceptions, the populace of the Caucasus and Central Asia harbored a predominantly negative view of Iran during that historical period. Rather than perceiving their southern neighbor as a beacon of strength and progress, they regarded Iran as a region characterized by weakness and backwardness (Koolaee and Shojaee 2024).

Meanwhile, Iran views with concern the rising threat posed by Turkey’s ambitions for pan-Turkism along its northern border, densely populated by Azeris. Tehran believes that the efforts of Azerbaijan and Turkey to invoke pan-Turkic sentiments against Iran are strongly backed by Israel. The concern in Tehran is escalating over the potential for recent geopolitical advances by the Azeri-Turkish alliance in the area to stir up ethnopolitical demands for a unified “Greater Azerbaijan” (Vatanka 2022). Additionally, Iran interprets Turkey’s pan-Turkic initiatives in the South Caucasus as a component of Ankara’s broader objective to reinvigorate the Turkic world. The efforts by Ankara to reconstitute the Organization of Turkic States, uniting Turkey with Kazakhstan, Kyrgyzstan, Uzbekistan, and Azerbaijan, have further increased Tehran’s apprehensions. Iran is concerned that Turkey’s expanding geopolitical sway among Turkic peoples might unsettle Iran’s Azeri-majority northern regions and jeopardize its territorial integrity (Heiran-Nia and Monshipouri 2023, 134).

Iran is also alarmed that Azerbaijan might be led into a risky “Balkanization trap” against Iran, bolstered by support from Turkey and Israel (Khamanei 2023). During the 9^th Summit of the Organization of Turkic States, Azerbaijani President Ilham Aliyev made a direct threat to Iran’s territorial sovereignty, declaring his commitment to defend Azerbaijanis everywhere, including those in Iran, as they are deemed part of the Azerbaijani nation (Azerbaijan State News Agency 2022). However, Iran’s concern over Baku’s expansionist rhetoric is more about the escalating pan-Turkic ideology fueled by its regional adversaries, Turkey and Israel, than about an immediate hard security threat.

The changes favoring Turkey in the South Caucasus have caused Iran’s discomfort to grow. Iran had been at ease with Russia’s dominant influence in the region, but the exclusive control Moscow held over negotiations between Azerbaijan and Armenia is diminishing, as the USA and the European Union have started engaging in the peace process. For Iran, the passive policy adopted by Russia toward the Second Nagorno-Karabakh war in 2020 can be viewed as a direct response to Prime Minister Nikol Pashinyan’s pro-Western orientation in Armenia (Valizadeh and Erfani 2024, 406). The agreements facilitated by Russia after the conflict signified a departure from the Russia-centric regional dynamics. This shift suggests a move towards a more multipolar environment, wherein the Turkey-Azerbaijan alliance is becoming more influential, disrupting the long-standing equilibrium that Iran had been accustomed to (Azizi and Isachenko 2023, 4). Thus, Iran finds its influence in the South Caucasus diminishing as Turkey’s influence grows.

For Tehran, increased Russian involvement in the region implied reduced activism by the USA, Turkey, and Israel. The perceived encirclement by a US-led Arab-Israeli coalition to the south and a Turkic-Israeli-Azeri coalition to the north has compelled Tehran to move away from its historically neutral stance in the region (Ayatollahi Tabaar 2023). The USA has exerted considerable effort to pursue a policy of excluding Iran, consolidating security relationships with Arab monarchies alongside Israel to highlight their collective antagonism towards Iran in the Middle East. Tehran is now concerned that the de facto alliance between Israel, Turkey, and Azerbaijan in the South Caucasus is mirroring these efforts. In a commentary for the Tasnim news agency, Velayati linked recent events in the South Caucasus to American efforts to extend its strategy of containing Iran to the north, positioning the Turkey-Azerbaijan alliance as a proxy (Velayati 2023). However, as Russia has reduced its security engagements in the South Caucasus due to the conflict in Ukraine, Iran’s strategic calculations have shifted, heightening its sense of threat from the evolving regional security dynamics.

In terms of geoeconomics, Iran views Turkey as its primary competitor in the South Caucasus. Iran is concerned that Turkey aims to marginalize it from transit and energy routes (Vatanka 2022). Turkey’s principal objective is to foster a “path-dependency” in its relationships with neighboring countries and regions. To this end, Ankara endeavors to position itself as a central hub in the East-West energy and transit corridors. Achieving this goal necessitates Turkey’s active involvement on the ground, including military presence, in areas that are pivotal for transit corridors extending from China to Europe. The South Caucasus holds particular significance for the realization of this strategy, where Iran, with its potential alternative routes, is perceived as a hurdle that needs to be circumvented. Since gaining independence in the early 1990s, the completion of energy pipelines has illuminated the intricate dynamics of cooperation among regional stakeholders, underscoring the complexities inherent in their roles within both the regional and global energy routes (Sadri 2023).

A subtle yet critical element in the ongoing crisis in Nagorno-Karabakh is the influence of the North-South and East-West international corridors, notably the Chinese Belt and Road Initiative (BRI). This initiative could utilize the South Caucasus as a viable passage to Europe. The BRI’s proposed Northern Corridor, stretching from China through Central Asia and Iran to Turkey or the Mediterranean, would traverse Iranian territory. However, Turkey has attempted to divert the China-Central Asia route away from Iran, aiming to establish the Middle Corridor and the Caspian Corridor instead. The Middle Corridor would link China to Kazakhstan and Azerbaijan via the ports of Aktau and Kurik in the Caspian Sea’s northeast. This corridor extends to Turkey through Georgia. Should the southern route of the Zangezur corridor be activated through Armenia’s province of Sivnik, Turkey could gain direct access to the Caspian Sea through Azerbaijan, bypassing the need for Georgia, and from there to Central Asia. The operationalization of the Turkey-Nakhchivan-Baku route could position Ankara as a favored partner for China in West Asia, further sidelining Iran in the evolving transit dynamics of the South Caucasus.

The war in Ukraine has underscored the geostrategic significance of the Middle Corridor as an alternative Eurasian transit route, designed to link Asia and Europe through Central Asia, the Caspian Sea, and Turkey (Eldem 2023, 2). Turkey sees the Middle Corridor as a key component of its strategic plan, valued not just for its direct Eurasian connection but also for reducing the dependency of Turkic nations on Russia and Iran. The 2020 Nagorno-Karabakh war and the ongoing Ukraine war have shifted regional power balances, creating unique chances for Turkey to fortify its strategic ties with Central Asian Turkic states and Azerbaijan. This is being done through multilateral formats such as the Trans-Caspian International Transport Route and the Organization of Turkic States. Strengthening relationships with these Turkic countries, particularly given their efforts to reduce reliance on Russia and China, gives Turkey increased influence in the East-West transit corridor. Furthermore, Turkey and the European Union (EU) share a mutual interest in developing the Middle Corridor, with the EU aiming to diversify its energy sources and bolster supply chain resilience. Establishing the Middle Corridor would diminish the influence of Russia, Iran, and China in the South Caucasus and Central Asia, while elevating the roles of Turkey and the EU in Eurasian geoeconomic affairs (Eldem 2023, 6).

Moreover, the proposed Zangezur Corridor is becoming a growing concern for Iran in the region. This corridor could undermine Iran’s geopolitical advantages by eliminating its unique position, facilitating connections between Nakhchivan and Baku, and enjoying a direct land route to Armenia. Iran views Turkey’s ambition to create a link to the Caspian Sea and Central Asia via the Zangezur Corridor, which Tehran labels as “NATO’s Turanist corridor,” as a move to sever connections with Armenia. In a meeting with Turkish President Recep Tayyip Erdogan in July 2022, Khamenei stated that “any initiative leading to the obstruction of Iran’s historic border with Armenia is intolerable” (The Armenian Spectator, 2022). Tehran regards this corridor as part of a broader strategy by Turkey and its NATO allies to destabilize Iran, especially as it would reduce Tehran’s geopolitical options due to its isolation in the South Caucasus.

At the same time, if Ankara successfully normalizes ties with Yerevan, leading to the establishment of the Zangezur corridor, it could geopolitically sideline Iran by directly connecting Turkey and Azerbaijan and circumventing Iran, thereby reducing its importance as a regional transit route. However, the potential for normalization between Armenia and Azerbaijan remains uncertain due to the ongoing tensions between Yerevan and Baku, further complicated by Azerbaijan’s growing military and strategic relations with Israel — a concern for Iran given its adversarial stance towards Israel. Particularly after the war in Gaza, where Israel was dealt a heavy blow by Iran’s allies, it may seek to retaliate by increasing its activities around Iranian borders, including in the South Caucasus.

Concerned by Turkey’s promotion of transit routes like the Trans-Caspian East-West-Middle Corridor, Iran has been motivated to advance the International North–South Transport Corridor (INSTC) through Armenian territory. The INSTC, a multimodal network connecting the Persian Gulf and Indian ports with Russia via ship, rail, and road, also aims to provide Moscow with alternative routes amidst the Ukraine war and Western sanctions against Russia. Despite collaboration between Iran, Russia, India, and recently Armenia to operationalize the INSTC, challenges remain in fully implementing the project (Golmohammadi and Markedonov 2024, 168). The European Union’s sanctions have markedly restricted Russian energy exports to Europe, compelling Russia to redirect its focus toward alternative markets, especially in Asia (Niknami 2024, 382).

A review of the level of trade between Iran and the countries of the South Caucasus reveals that Iran has no significant economic ties to this region. According to 2022 data, Iran’s trade volume with the three South Caucasus countries totaled less than 1.3 billion dollars. In contrast, Turkey’s trade with Azerbaijan and Georgia exceeded 10 billion dollars. With trade relations amounting to 500 million dollars with Azerbaijan, Iran is ranked eighth among the country’s trading partners. Although Iran plays a crucial role in mitigating Armenia’s geopolitical isolation, the trade volume between the two countries falls short of 600 million dollars. The trade volume between Iran and Georgia is approximately 300 million dollars (Iran Press 2022). The US sanctions have also prevented Iran from playing any role in the energy transit equations in the Caspian and the South Caucasus. Indeed, not only the West but Russia and Turkey too are keen on sidelining Iran from the geoeconomic dynamics of the South Caucasus, particularly in East-West energy transfers. Beyond the detrimental impact of sanctions, domestic factors such as insufficient focus on the South Caucasus within Iran’s regional policy, the absence of an effective economic strategy for developing trade relations with neighboring countries, and deficiencies in technical and economic infrastructure have all contributed to the minimal trade levels with the South Caucasus.

Iran is geographically located in the middle of two regions with different logics: the Middle East, dominated by geopolitical logic, and Eurasia, where geoeconomic logic prevails (Mousavi Shafaee 2017). Since 9/11, Iran’s foreign policy has increasingly concentrated on the Middle East, driven by geopolitical considerations. Despite efforts over the past two decades to balance its regional focus, significant shifts have not materialized. As geopolitical, military, and security conflicts in the Middle East have intensified, the pivot towards Eurasia has encountered substantial obstacles. A few strategic perceptions have constrained Iran’s foreign policy within the Middle East, hindering its engagement with other neighboring regions, including the South Caucasus. Firstly, a conviction has developed among Iranian leaders that, given Iran’s strategic depth in the Middle East and its prominence in that region, it should primarily remain a Middle Eastern power, dismissing other regions as unable to enhance Iran’s global status. Secondly, the security-military paradigm essentially prioritizes the Middle East in Iran’s foreign policy, influencing the country’s behavior. Given the national capabilities and systemic constraints, Iran, as a regional power, cannot prioritize multiple regions simultaneously as strategic choices (Mousavi Shafaee and Golmohammadi 2022, 68–69). Consequently, as long as the Middle East is the focal point of Iran’s foreign policy, an active regionalist stance from Iran in the South Caucasus is unlikely.

Conclusion

The shifting geopolitical dynamics in the South Caucasus have positioned Iran’s policy towards this region as more of a passive measure, primarily aimed at mitigating the strategic advancements of Turkey and Azerbaijan, rather than pioneering its initiatives. The swift changes in regional equations have seemingly taken Tehran by surprise, a notable concern given Iran’s previous reliance on a Russia-centric order in the region that favored its strategic interests. As this longstanding order begins to dissolve, and with various international actors, including Turkey, Israel, and European states, asserting their influence more forcefully, Tehran finds itself amidst growing complexities. Iran’s geographic proximity to the South Caucasus, marked by an extensive 800-kilometer border, renders it particularly susceptible to the repercussions of local disputes, more so than Turkey, Russia, or Georgia. Also, Iran’s proximity to the contentious Nagorno-Karabakh region places Tehran in a precarious position, making its traditional diplomatic stance of neutrality between Armenia and Azerbaijan less effective, especially as aligning with Armenia to restore regional balance could potentially exacerbate the delicate nature of Iran’s ties with Azerbaijan.

Concurrently, Armenian leaders have been vocal about their ambitions to align more closely with the European Union, a transition that, while gradual, signifies a clear pivot away from Russian affiliations towards Western engagement. This shift, especially as the viability of Russian-mediated peace negotiations remains uncertain, has led to Armenian criticisms of Moscow’s failure to bolster Armenia’s defensive posture (Trevelyan 2022). This evolving scenario could erode Iran’s influence in Armenia as well, given Yerevan’s exploration of new alliances. Moreover, an increase in Western engagement in the region is seen by Tehran as a significant strategic challenge. Nevertheless, the growing partnership between Ankara and Baku prompts Tehran to extend greater support to Armenia, underscoring the nuanced geopolitical entanglements in the region.

Meanwhile, the relationship between Iran and Turkey, characterized by a historical mix of competition and cooperation across different regions, is witnessing an intensified direct and indirect rivalry in the South Caucasus. Despite their conflicting interests in regions like Syria and Iraq, Iran and Turkey have managed to navigate their disagreements without resorting to direct confrontation. However, the robust alliance between Turkey and Azerbaijan, with Turkey fervently backing Azerbaijan’s territorial claims against Armenia, makes any significant Turkish compromise unlikely, potentially straining Iran-Turkey relations further. The proposed creation of the Zangezur corridor exemplifies a critical point of dispute, as it would bolster the Turkey-Azerbaijan alliance at Iran’s expense. Faced with a shifting power balance favoring the Turkish-Azeri axis, Iran’s sense of insecurity might prompt defensive actions, regardless of Turkey’s actual intentions towards Iran.

Although the Raisi administration has introduced a “neighborhood policy” aimed at redefining Iran’s role and strategic position in neighboring regions, it seems that, at least in the foreseeable future, Tehran will not be able to devise and successfully implement an active regional strategy of its own in the South Caucasus.

Looking to the future, two main drivers play a greater role in shaping the prospects of Iran’s foreign policy in the South Caucasus: Russia’s war in Ukraine and the talks to revive the JCPOA. The Russian invasion of Ukraine has led Iranian leaders to believe that, in the absence of viable deterrence capabilities and reliable strategic allies, the country is exposed to the risk of military invasion by hostile powers. Therefore, the war has sparked serious debates on the necessity for Iran to have nuclear deterrence and on the importance of expanding military and security cooperation with Russia. This strategic requirement means that national security will continue to be given priority over economic development. Perceived threats emanating from the volatile geopolitics of the Middle East make Iran’s diplomatic and military resources continue to be invested in that region. But at the same time, the South Caucasus, which has traditionally been associated with the geoeconomic logic of Iran’s regionalism, could also become a new front in Iran’s deterrence policy against old and new regional rivals and adversaries like Turkey and Israel.

Russia’s growing international isolation due to the war in Ukraine has also provided new incentives for a strategic partnership between Moscow and Tehran. It is expected that the security cooperation between Iran and Russia will develop in areas where they have common interests, from the Eastern Mediterranean to the South Caucasus. An Iranian-Russian strategic partnership may have significant implications for the dynamic geopolitics of the South Caucasus. However, in any case, the strategic priority of Iran and Russia is to preserve friendly relations with Turkey and prevent Ankara from re-strengthening ties with the West, especially with NATO. A move towards localizing and regionalizing conflict resolution mechanisms aligns closely with Tehran’s security objectives. However, Ankara’s self-reliant stance in regional politics poses a dilemma to Tehran: a Turkey that relies less on NATO aligns with Iran’s strategic interests, yet Ankara’s bold, diversified approach in regional affairs is a cause for concern in Tehran.

Finally, the war in Ukraine and Iran’s growing desire to develop relations with Eastern powers and organizations present a potentially favorable prospect for expanding Iran’s strategic connections with the South Caucasus. Western sanctions against Russia and Moscow’s need for reliable partners like Tehran have already led to Iran’s full membership in the Shanghai Cooperation Organization (SCO), the extension of the preferential trade agreement with the Eurasian Economic Union (EAEU), membership in BRICS, and new trade agreements with neighboring countries. These developments could present new opportunities for Iran’s active regionalism in the South Caucasus. Although Iran currently lacks the material and normative capacity to play an independent role in the South Caucasus, multilateral platforms centered on local structures and actors can open up some opportunities for Iran.

The geopolitical dynamics from the Eastern Mediterranean to the South Caucasus have become increasingly interconnected, particularly concerning Iran’s strategic interests. The potential collapse of Bashar al-Assad’s regime in Syria, coupled with significant shifts in the broader Middle Eastern geopolitical landscape, has tilted the balance of power and influence to the detriment of Iran and Russia while strengthening Turkey’s position. Tehran is increasingly apprehensive that Turkey may seek to establish the Zangezur Corridor, thereby opening a new front in the South Caucasus. However, Turkey is unlikely to escalate the situation as long as instability persists in Syria, as unpredictable developments in the Levant prevent Ankara from shifting its focus entirely to another front. Nonetheless, the underlying threat perception remains a critical factor driving the regional rivalry between Iran and Turkey.