Baku, Azerbaijan – Azerbaijan, which won victory after six weeks of fighting against Armenian forces in Nagorno-Karabakh, now controls all of its territory on the border with Iran.

Moreover, thanks to the agreement it signed with Armenia, it also promised to establish a land corridor with Nakhichevan, a land located on the border with Turkey that has no connection with the rest of the country.

Although the Azeri Turkish population in northern Iran showed joy in the face of this development, this corridor was met with anxiety in Iran. The reason for this is that the trade between Azerbaijan and Nakhchivan has been carried out through Iran for 30 years. In this way, Iran had political influence over Azerbaijan and made money from this trade.

Iran’s energy risks

According to the conservative Mashrek website, which publishes in Iran, the corridor will have more than one negative geopolitical impact on Iran. Mashrek reviewed them in six titles:

Azerbaijan gave 15 percent of the gas it sent to Nakhchivan through Iran to Iran as a commission. Iran signed a gas sales agreement with Turkey in 1996. Because of this agreement, Turkey has been buying expensive gas from Iran for years. Turkey pays Iran $ 490 per thousand cubic meters, while it can buy Azeri gas for $ 335. If a gas line from Azerbaijan to Turkey is laid through this corridor in the future, Iran’s gas loss could be large.

The pipeline project, which was planned to run from Turkmenistan to Turkey via Iran, was frozen in 2017 due to financial disputes. Turkmenistan can now deliver this gas to Turkey via Azerbaijan. The importance of Iran’s pipeline to Armenia has also diminished.

The US-backed Trans-Caspian pipeline project could be back on the agenda. This pipeline, which will run from Turkmenbashi, the capital of Turkmenistan, to Azerbaijan, can be delivered to Europe via existing pipelines between Azerbaijan-Georgia and Turkey.

More obstacles will lie ahead of the pipeline project, which is planned to carry gas from Iran to Europe. Iranian media have suggested that Turkey, Azerbaijan and Israel are planning an invasion of Armenia’s territory on the Iranian border, but this cannot happen because of Iran’s presence in the region, and instead the idea of a corridor has been returned.

Trade route between Turkey and Central Asia may change. Iran is currently key in the road trade from Turkey to Central Asia. According to 2020 data of the Iranian Ministry of roads and transport, this year, despite the impact of coronavirus on trade, about 12 thousand Turkish trucks cross the Iran-Turkey border every month, and a significant part of them travel to the Turkic republics and Afghanistan.

This trade is very profitable for Iran. A truck entering from Turkey and leaving the border with Turkmenistan pays about $ 700-800 in transit fees to Iran for this 1,800-kilometer road. The corridor that will be opened in Armenia can significantly reduce this traffic.

Rail transport prospect

After entering Nakhchivan from Yerevan, the capital of Armenia, the railway built during the Russian Empire crosses the Nakhchivan-Iran border and connects to Azerbaijan through the Armenian corridor. This railroad has been dormant for years because of the war.

Iran hopes to reach Armenia by rail through Nakhchivan when this Railway becomes operational again. Although the two countries had a land border, there was no railway line crossing this border. So Iran sees the prospect of increased trade over this rail as one of the rare things that could be in its interest in the deal.

Iran had signed a comprehensive trade agreement with the Eurasian Economic Union in 2018. The agreement signed with this economic union, consisting of Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia, will enter into full force in 2021.

Turkey, on the other hand, aims to extend Kars to Azerbaijan and Central Asia via the Armenian corridor with a new railway connecting Kars to Nakhichevan. In Iran, the conservative Tasnim agency says Turkey aims to increase its influence in the region through this.

Armenia also aims to increase trade through rail trade. Armenia’s railway connections with Turkey and Azerbaijan, which could not be connected to Iran by rail through Nakhchivan due to the war, were also dormant for the same reason.

The only railway that could connect Armenia to the world was through Georgia to Russia. But Abkhazia, located in the region through which this railway passes, declared its independence with the support of Russia. Because Georgia does not trade with this region, which only Russia, Nicaragua, Venezuela, Syria and several Pacific Islands recognize its independence, Armenian trains cannot pass from there to Russia.

Armenian Prime Minister Nikol Pashinyan, who made a statement on the issue, said that they hope to trade with Russia through Azerbaijan and Iran through Nakhchivan:

“This could be a turning point. But these are issues that will be discussed in the negotiations, we do not know in advance whether they will be implemented.”

Trade growth in border towns

He believes that the benefit of opening Iran’s railway connection to Armenia, as well as the reconstruction of Azerbaijani settlements on the Iranian border that it has taken back from Armenian control, will increase trade with the north of Iran.

Iran is considering opening new customs gates at this border.

“The importance of Iran’s borders cannot be reduced by a small corridor that will open in Armenia,” the official IRNA agency said. Iran’s active involvement in the region can provide more interest to both Iran and Azerbaijan,” it says.

Geopolitics: Turkey’s growing influence in the Caucasus

Turkey’s growing role in the South Caucasus and the deployment of Russian peacekeepers in the region are other reasons that have raised alarm bells for Iran. Although Iran, which sees Russia as its partner, is less concerned about this second phenomenon, it is not easy for Tehran to accept the growing Turkish influence in the Caucasus.

“Turkey is trying to reduce Russia’s influence in the region, targeting geopolitical, economic and energy interests,” says the conservative Javan newspaper, closely associated with the Islamic Revolutionary Guard, in an analysis examining Turkey’s role in the Nagorno-Karabakh conflict:

“Turkey’s approach is broadly in line with the US strategy of restricting Russia. “It is not a wise approach to violate Iran’s geopolitical interests by establishing a new corridor. “Iran will not tolerate these initiatives by Turkey and Azerbaijan and will not accept this corridor.”

Speaking at the opening of Parliament in Iran, Deputy Mahmoud Ahmadi Bighash suggested that Turkey has changed the political map in the region, paving the way for NATO, Israel and the United States to reach the Caspian Sea.

As details of the Karabakh agreement emerged, the condition of the new corridor through Armenian territory caused great controversy. As well as the signatories of the agreement, Iran and Georgia are particularly concerned that making meaningful changes to their connectivity patterns in the South Caucasus could damage their transit capabilities.

The 2020 Karabakh War ended with great Russian diplomatic success on 9 November 2020, when a trilateral agreement was signed between Armenia, Azerbaijan and Russia. The seven surrounding areas would be returned to Azerbaijan, while Russian peacekeepers would guarantee the security of cut off Nagorno-Karabakh.

Although the exact role has not yet been confirmed based on rhetoric from Turkey and Azerbaijan, some kind of direct Turkish military involvement will take place on Azerbaijani territory. More importantly, Turkey won a land corridor to Azerbaijan’s Nakhchivan exclave. The provision in the document is as follows:

“Armenia guarantees the security of transport links for the unhindered movement of citizens, vehicles and cargo in both directions, except for Nakhchivan with the Azerbaijani mainland, which is separated by Armenian territory.”

Also,” Transportation control is implemented by the border service of the Russian Federal Security Service. With the agreement of the parties, the construction of new transport communications connecting the Nakhchivan Autonomous Republic and the western regions of Azerbaijan will be ensured.”

This is a major breakthrough for Turkey, as it will allow the country to strengthen its influence over the Caspian Sea and perhaps, in the longer term, look more at its Central Asian relatives.

Since Iran and Russia have historically perceived the Caspian Sea as a condominium between themselves (plus coastal states since the end of the Soviet Union), this would create a major dilemma for Iran and Russia. Turkey’s potential involvement could upset this balance and, in particular, Iran’s position.

However, this is highly hypothetical. After all, this scenario would take years, if not decades, to materialize, and even then Turkish influence could not be as great as China or Russia, the two major powers in the region.

What is troubling Iran is a potentially huge shift in the region’s transport routes. For decades, Azerbaijan has been dependent on Iran to transfer energy and other supplies to Nakhchivan. The New Karabakh agreement could change that.

Now Armenia will guarantee the opening of a corridor on its territory to allow Azerbaijan to transport goods directly to Nakhchivan. Naturally, this limits Iran’s leverage over Azerbaijan.

But Javad Hedayati, who heads transit operations at Iran’s transport ministry, said that despite the planned opening of the new corridor, Iran would remain a viable route for trade. ” It is likely that this corridor will only accommodate local traffic between the Republic of Azerbaijan and Nakhchivan, ” Hedayati said.

Turkey has long sought to use the Nakhchivan corridor for geopolitical purposes. This was evidenced by the quickness with which the Turkish government announced plans to build a railway to Nakhchivan after the November agreement.

This comes on top of an earlier announcement of the construction of a gas pipeline to the exclave, underlining the seriousness behind the Turkish intention, at least in relation to the section from Turkish territory to the exclave itself.

However, much remains unclear about the new corridor on the territory of Armenia. First of all, will the road be used only by Turks and Azerbaijanis? Given the level of distrust in Turkey and Azerbaijan towards Russia, whose forces will control this corridor, it is unlikely that Azerbaijan and Turkey will be willing to commit large financial resources to restore links on Armenian territory.

After all, will the corridor become Armenian territory or will it fall into a tripartite administrative regime? These are perhaps the defining questions that remain unanswered. Since Armenia will not be satisfied with this condition, continuous events along the corridor can also be imagined. Transit fees may soften Armenia’s position, but why should Russia be interested in operating the corridor?

If the corridor is in operation, these troublesome questions should be managed between the two sides and not trusted with each other. These dilemmas were well summed up in the words of the Iranian official Hedayati. He stressed that Armenia could block access to Turkey’s corridor for the transfer of cargo or passengers to Azerbaijan via Nakhchivan and to countries east of the Caspian Sea.

One country particularly concerned about the potential development of the new corridor is Georgia. Various pipelines, roads and a large railway carry the country from Azerbaijan to Turkey. This has been a backbone of Georgia’s regional importance since the end of the Soviet Union, and indeed has served as a major attraction for larger players such as Europe and the United States.

Naturally, many in Georgia began to wonder whether this enviable position could be challenged. The consensus view is that there will be no changes to the region’s connectivity models in the short to medium term.

Even in the long term, if the aforementioned uncertainties around the new corridor are resolved, many still believe that Azerbaijan and Turkey will not trade the already built and functioning railway and pipeline infrastructure that passes through Georgia for the Nakhichevan alternative. Perhaps the corridor will serve to provide local connections, perhaps limited trade (though highly unlikely).

After all, Georgia has been officially participating in the trilateral partnership with Turkey and Azerbaijan for nearly a decade. The durability of the format has been tested by the change of governments and region-wide geopolitical transformations over the past decade. Each of the three countries needs the others.

Turkey wants a more stable Georgia with deeper economic and energy relations, and Azerbaijan needs Turkey’s support. Georgia, under pressure from Russia and as a transit dependent, needs both Turkey and Azerbaijan, given that it is among the two cooperation members.

Georgia also sees its position between two major regions, Europe and Central Asia. Introduced in 2017, the 826-kilometer Baku-Tbilisi-Kars railway provides cargo delivery between China and Europe with a shipping time of about two weeks. Up to eight million tons of cargo can be transported by rail by 2025.

Abandoning this transit corridor will undermine the effectiveness of the South Caucasus transportation and energy corridor. This makes the scope of the Nakhchivan corridor quite limited. Perhaps, what the region is likely to see is the growing interconnectedness of the exclave with Turkish territory. The emergence of a major corridor through Nakhchivan will occur, at least if there is a meaningful improvement in relations between Turkey and Armenia.

The latest conflict in Nagorno-Karabakh has been a disaster for Iran. The terms of the cease-fire agreed on by Armenia and Azerbaijan represent a grave threat to Iran’s long-term strategic interests. The effects of this are likely to affect the perception of the regime among the Iranian people, and alter its policies on Azerbaijan and Syria.

Azerbaijan now has control over the entirety of its border with Iran along the Aras river. While this is cause for celebration in Azerbaijan, it is viewed with alarm in Iran because an extension of Azerbaijan’s border gives Israel access to more territory from which it can keep tabs on Iran.

Despite denials from Azerbaijan, it is no secret that Israel and Azerbaijan enjoy substantive cooperation in intelligence, energy and military matters. Azerbaijan is one of the largest buyers of Israeli weaponry. Its use of Israeli “kamikaze” drones during the war played an important role in tilting the battlefield to its advantage – although Turkish-made Bayraktar TB2 drones have been credited as the true game-changer in the conflict.

In addition, Azerbaijan and Israel maintain deep intelligence ties. Were Israel to launch airstrikes against Iranian nuclear installations, Azerbaijan would likely play a vital role, either as a refueling stop or launchpad.

The other consequence of the war is the proposed creation of a transit corridor through Armenian territory, connecting Azerbaijan to its Nakhchivan exclave. It is likely that this corridor, which will be patrolled by Russian troops, will run parallel to Armenia’s border with Iran.

This has already raised concerns in Iran, as it could effectively cut off Iranian access to Armenia, and from there to Europe via Georgia. For a country already reeling from international sanctions, it is of great importance to Iran that it maintains access to friendly neighbors.

Turkey is another important winner in the conflict. Not only will its troops maintain a presence in Azerbaijan, it also will have direct access to the Caspian Sea through the proposed Nakhchivan-Azerbaijan corridor. Turkey can now directly project influence in Central Asia, which has been one of Turkey’s most cherished ambitions.

Iran will have taken note of Russia’s reluctance to offer full-throated support to its ally, Armenia. The takeaway from Russia’s role in the Nagorno-Karabakh conflict is that it is happy to sacrifice an ally if it becomes too bothersome.

In this conflict, then, Russia stuck to the letter, rather than the spirit, of its alliance with Armenia, stating that its security commitments only extend to Armenian territory. The Russians allowed Azerbaijan to reclaim all its lost territories, while Armenia retained rump areas around Nagorno-Karabakh’s capital.

Russia will maintain its influence in the region by providing a peacekeeping force in Karabakh and along the proposed Nakhchivan-Azerbaijan corridor. It also will be happy to see the back of Pashinyan, whose political career seems to be over. Russia also appears to be guided by its broader goal of ensuring that Turkey remains out of the orbit of the West.

Astute policymakers in Iran will likely draw the right conclusions from this, particularly in terms of what it might augur for Iran’s ally in Syria. Having seen the eagerness with which Russia and Turkey were willing to hash out a deal between themselves, Iran is likely to push the Syrian regime in the direction of concluding the Syrian civil war.

The main effect the outcome of the conflict will have on domestic politics within Iran is likely to be psychological. It is yet another blow to Iran’s self-image as a regional hegemon. Indeed the fact that the regime was a bystander to the conflict, unable to influence its outcome, will revive memories of the two Russo-Persian Wars of the 19th century, which resulted in Persia having to cede control over the entire South Caucasus.

It reveals to the Iranian people that Iran no longer has the economic might, the technological sophistication or an alluring political model to influence a region that was under Persian influence for hundreds of years – one is tempted to say thousands, since the time of the Achaemenid empire. Taken together, all of this represents yet another slight to the legitimacy of the regime that has ruled Iran since 1979.

Iran is not accepting the Nakhchivan corridor issue. The second battle of Karabakh ended 44 days later with the superior success of the Azerbaijani army. A nine-point ceasefire declaration was signed with Russia at the table, and for the first time in two months, witnessing a ceasefire. According to the decision, Armenia will return the occupied territories to Azerbaijan, and Russian and Turkish troops will monitor the ceasefire.

Some analysts are unhappy with Russia’s deployment of troops, especially in Karabakh, but many analysts on the other side argue that the Russians will be temporary as they try not to overshadow the achievements of the Azerbaijani army. In any case, over time, it will become clear how the agreement will be fully implemented on the field. In particular, the presence of Turkey in Azerbaijan and the control of the Turkish soldier over the issue comforts the Azerbaijani side.

However, in all that has happened, and in the views expressed, there are two states that seem to be a defeated country. The first is Armenia, the other is Iran. Although the Islamic Republic of Iran entered the Karabakh issue diplomatically late, it made a serious diplomatic effort. One side appreciates the ceasefire decision and chooses to remain silent, and in short, the incumbent officials do so.

However, the opposition, both inside and outside Iran, believes that the ceasefire decision is extremely against and to the detriment of Iran. The Nakhchivan corridor is at the center of all criticism. Analysts claim that the Nakhchivan corridor completely cut off Iran’s road to Armenia. On the one hand, there are those who claim that the corridor changed the geopolitical order of the region against Iran.

Why is Iran worried about the Nakhchivan Corridor? In fact, it is quite normal for Iran to worry about the Nakhchivan corridor.If Nakhchivan is connected to the eastern part of Azerbaijan by the mentioned corridor, first of all, Azerbaijan will no longer need Iranian land to go to Nakhchivan.

This is a simple path, and for example, the Republic of Azerbaijan used to give 15 percent of the gas it sells to Turkey to Iran, and the implementation of such a project would be extremely harmful to Iran. Also, for Turkey, Iranian soil will no longer be the first priority. Because Turkey will no longer need to cool off in Iran to connect to Central Asia and, in a sense, to the Turkic world, and it will be closer and naturally cheaper to connect with the Nakhchivan corridor.

In this case, especially when one considers the current difficult economic situation in Iran, in the future, after the full settlement of the Karabakh conflict, even the relations between Armenia and Turkey and even Azerbaijan may be normalized. At that time, Turkey and Azerbaijan could be a much better preference for Armenia than Iran, and Iran could suffer serious trade losses.

If this project is implemented, the policy of the Republic of Azerbaijan against Iran will undoubtedly become more powerful and its interest in the south will increase. At this point, it is even clearer how much Iran is concerned about the settlement of the Nakhchivan and Karabakh issues in general.