Understanding the Armenia-Iran Relationship

Understanding the Armenia-Iran Relationship

Yerevan’s ties with Tehran are not ties of choice but necessity.


Armenians are increasingly frustrated at Western inaction in the face of ethnic cleansing. Just five days before Azerbaijani forces moved to snuff out militarily Armenian self-rule in Nagorno-Karabakh, Acting Assistant Secretary of State Yuri Kim declared to the Senate Foreign Relations Committee, “We will not tolerate any attack on the people of Nagorno-Karabakh.” Yet tolerate the Biden administration did. In the wake of the Azerbaijani move that sent more than 100,000 of the region’s indigenous Armenians packing, the State Department did little more than issue perfunctory condemnation.

The reason for inaction is multi-fold. The United States is distracted elsewhere. The speed of the Azerbaijani action created a fait accompli. There is widespread misunderstanding about Armenia’s geopolitical orientation. As Azerbaijan cultivates an image of being pro-Western and pro-Israeli, Armenia has maintained close relations with both Russia and Iran. While a sense of betrayal inside Armenia has led the country to pivot quickly away from Russia, what is the reality of Armenia-Iran ties?


Armenia does have ties to Iran. In 2021, Armenia-Iran trade amounted to $471 million annually, an amount less than the total United States trade with Aruba. Context matters, though. Armenia’s trade with Iran is equivalent to Azerbaijan’s trade with the Islamic Republic. In recent years, though, it appears Azerbaijan’s trade has grown as the regime of President Ilham Aliyev regime’s entrance into a gas swap and trade scheme with Iran. Turkey’s trade with Iran, meanwhile, is approximately $6.4 billion and growing. Put another way, Turkey’s trade with Iran is equivalent to the entire budget of Armenia.

The difference between Armenia on the one hand and Azerbaijan and Turkey on the other is that Yerevan’s relationship with Tehran is one of necessity, while Baku and Ankara’s ties to Tehran are relationships of greed and choice. Armenia has two open borders and two closed ones. Turkey and Azerbaijan have blockaded Armenia for decades. Azerbaijan’s blockade was nominally about Nagorno-Karabakh, but Turkey has had no border dispute with Armenia. Its blockade is illegal under the 1921 Treaty of Kars that stipulated the “free transit of persons and commodities without any hindrance” between Turkey, Armenia, and Georgia. The Turkish blockade forces Armenia to rely upon Iran’s transportation system. Because Armenia’s export economy relies on agriculture and manufacturing, affordability depends upon accessing markets by land. 

If given a choice between a pomegranate transported by truck and a pomegranate an order of magnitude more expensive due to the expense of air cargo, consumers will universally choose the former. If the goal were to reduce or end Armenia’s trade with Iran, the best way would be to demand Turkey lift its unilateral blockade. That targeting Turkey would also benefit Israel is an added bonus, given how Turkey competes with Qatar to be Hamas’ chief financial and diplomatic sponsor. Trade also transits through Georgia, but that country’s tilt toward Russia imperils that already limited route.

This does not mean that Armenia’s trade with Iran is not at times problematic, even if it is a matter of survival. Yerevan recognizes this. Armenia works with the United States and the West to limit its necessary trade and keep funds out of the hands of the Islamic Revolutionary Guard Corps. Especially as Armenia prepares to decommission its Soviet-era Metsamor Nuclear Power Plant, Yerevan consults with Iran to provide goods in exchange for electricity to ensure no cash goes to Iran. Such an understanding grows even more critical as Armenians consider the inevitability that Russia will cut off gas to Armenia as early as this winter to punish the country’s westward pivot. Azerbaijan’s oil and gas trade with both Russia and Iran is different: It is a choice and purely profit-driven. The Islamic Revolutionary Guard Corps monopolizes Iranian gas and oil, so Azerbaijan’s energy deals with Iran only help the terrorists the Aliyev regime claims to fight.

Baku helps the Kremlin bypass sanctions for a cut of the cash. In the latest deal, announced this month, Russia’s Lukoil will provide SOCAR, Azerbaijan’s state oil company, with a $1.5 billion loan so that Lukoil will provide crude to SOCAR’s refinery in Turkey. Put another way, Russia is pumping money into Azerbaijan’s state oil company to fill the coffers of one of Hamas’ top funders. The news of the arrangement came amid travel to Moscow by Azerbaijani Energy Minister Parviz Shahbazov for discussions not only about augmenting the Azerbaijan-Russia energy trade but also for trilateral meetings with Russia and Iran about energy infrastructure integration. While Azerbaijan seeks to cash in on the Iran trade, Armenia pursues neither free trade deals nor does it solicit significant Iranian investment.

Meanwhile, for all the hype, Armenia does not purchase weaponry from Iran, a very tempting thing to do given the Russian and, up to a few months ago, Western restrictions on weapons sales to Armenia. Instead, Armenia has turned to India in its hour of need. Nor is there significant laundering of sanctioned goods or money from Armenia to Iran. While there have been a few marginal cases, U.S. government officials say the Armenian government has cooperated fully with investigators and shut down leaks where they do occur. In effect, Armenia follows the path of Cyprus in cracking down on money laundering. Nor, despite tremendous pressure from Tehran, has Armenia cracked down or rejected Iranian dissidents who flee growing repression in the Islamic Republic. Indeed, while Turkey returns Iranians to the Islamic Republic, Armenia has established itself as a stop along the Underground Railroad for Iranians to reach safety in Europe or America.

Azerbaijan’s supporters in Washington argue that the battle against Iran mandates deference to Aliyev’s supposed intelligence support for Israeli and Western efforts to counter Iranian terror and Tehran’s nuclear drive. In reality, much of the infiltration today occurs via Iraqi Kurdistan’s much more permissive border. For Iranian, Turkish, and Israeli agents, Erbil is the Casablanca of the twenty-first century. All Western intelligence services today, however, operate in Armenia, most often focusing on Iran. They do so without interference.

The Armenia-bashing of some analysts is deeply dishonest and comes at a substantial moral cost for the United States. Armenia is a country of genocide survivors. It is the first and only remaining Christian nation in the Middle East. Today, Russia, Turkey, and Iran jointly hold it hostage. It is an American interest to free Armenia from their grip rather than sacrifice it and other pro-Western democracies for the illusion of Azerbaijan and Turkish support. It is time to base American policy on reality, not endless Twitter repetition of the big lie.

Michael Rubin is a senior fellow at the American Enterprise Institute.

Image: Shutterstock.