On the back of President Hassan Rouhani's visit to Baku on 12 November, Iran's role in the South Caucasus is once again in the limelight. Since the three states of the South Caucasus – Armenia, Azerbaijan and Georgia achieved independence at the collapse of the Soviet Union in 1991, the Islamic Republic of Iran has officially always upheld that it pursues a policy of friendship and of equal treatment of its three smaller northern neighbors. In reality, the period of 1991-2014 has witnessed Tehran’s stance toward the region fluctuate between a policy of interference (in the case of Azerbaijan) to giving precedence to Russian interests in the South Caucasus. Accordingly, Tehran, which has otherwise close historic ties to all the three states in the region, has largely failed to play a constructive role in the diplomatic arbitration processes to find political settlements to the region’s territorial conflicts. Iran’s posture and input in the case of the Nagorno-Karabakh conflict illustrates this point rather convincingly.

History of Iranian mediation

When President Hassan Rouhani was elected in June 2013, he vowed that his government will pursue a foreign policy that is conciliatory and with an emphasis on improving ties with Iran’s immediate neighbors. However, while Rouhani’s repeated policy statements about the need to break with Iran’s unfavorable image among many of its regional neighbors has considerable backing in the byzantine makeup of the Islamist regime in Tehran, he has so far failed to convert his rhetoric to tangible policy change as far as the South Caucasus is concerned. This lack of movement in Tehran’s policy has been glaring. Based on Rouhani’s stated premise and logic, Tehran can by realigning its policy toward the South Caucasus enhance its political stature, further its economic interests while securing one its most basic stated national security priorities, namely the prevention of the resumption of armed hostilities along its northern border regions.

In this case, realignment of policy invariably will require Tehran to address the question of Nagorno-Karabakh. Among the enduring territorial conflicts in the South Caucasus, the dispute over Nagorno-Karabakh between Armenia and Azerbaijan stands out for its potential to break out again in military hostilities. Furthermore, it has a capacity to threaten Iran’s domestic stability given the strong ethnic linkages that are found between the Republic of Azerbaijan and the large ethnic Azerbaijani population of Iran south of the Aras River.

To be fair to Rouhani, his government’s principal focus since coming to office has been to resolve Iran’s nuclear dispute with the international community and to lessen tensions with Tehran’s Arab neighbors. The South Caucasus, never a top priority for any administration in Tehran, was relegated further down the list of priorities. In other words, during Rouhani’s first year in office, Tehran’s dithering policy stance largely continued.

As far as the South Caucasus is concerned, this Iranian dithering has a long and somewhat legitimate history. After the Persian Empire lost its South Caucasian territories to the Russian Empire following successive military defeats in the 19th century, Iran underwent decades of internal political and economic crises which meant Tehran’s capacity to engage in foreign affairs was severely restricted. This handicap applied also to South Caucasus despite the geographic and historic proximity of the region to Iran. Meanwhile, the creation of the Soviet Union in 1922 put the South Caucasus behind the Iron Curtain, cutting Iran entirely off from the region.

At the time of the collapse of the Soviet Union in 1991, the Iranian authorities were on the one hand faced with an enormous strategic vacuum to the north while badly unprepared to respond to this new geopolitical reality. At first the inclination was to consider the entire former Soviet South – from South Caucasus to the five Central Asian States – as fertile ground for Iranian overtures. In particular, the newly independent states to its north were regarded as an opportunity for Tehran to break the international isolation that Iran felt the West wanted to impose on it. Very quickly, however, Iranian optimism about making diplomatic inroads among the new states turned into fear that the United States – Iran’s arch-rival – would fill the vacuum left behind by the Soviets. In other words, Tehran was very early on in the post-Soviet era put on the defensive and preoccupied with defusing what it perceived to be security threats emanating from the newly independent post-Soviet states. 

Tehran’s reaction to the Nagorno-Karabakh conflict has to be seen in this context of Iranian security anxieties at the time but which still resonates to this day. With its border only about 40km from Nagorno-Karabakh, the Iranians on the one hand feared the conflict could spillover into Iran. Meanwhile, the irredentist rhetoric of the Azerbaijani government of Abulfaz Elchibey (1992-93) – who spoke of Greater Azerbaijan and the unification of Azerbaijani regions of Iran with the Republic of Azerbaijan – only exacerbated Tehran’s fears. But Tehran’s earliest posture toward the Nagorno-Karabakh conflict was also heavily shaped by geopolitical calculations, something that the official narrative from Tehran usually neglects to highlight. Unlike Turkey, Tehran’s regional rival that unequivocally backed Azerbaijan out of kindred sympathy, Iran maintained good relations with Armenia.

In the eyes of the Iranians, this open channel to the Armenian side of the conflict made them into the neutral and therefore the most suitable regional arbiter that could help bring a diplomatic solution to the conflict. Azerbaijan, however, interpreted Iran’s decision to retain its ties to Yerevan as a case of double-dealing and a symptom of Tehran’s underlying desire to prevent an outright Azerbaijani military victory in the conflict.

Despite Iranian hopes then and since, Tehran’s mediation efforts peaked during the period from January to September 1992, which also happened to see some of the fiercest fighting between Armenian and Azerbaijani forces. That Baku has never considered Iran to be a neutral arbiter is a fact that continues to hamper any mediation role Tehran might want to assume. Any Iranian declarations to the contrary have so far evidently failed to convince the skeptics in Baku.

Iran’s geopolitical standing in South Caucasus

Today, Tehran’s state-to-state relations in the region ranges from intimate (Armenia) to cordial (Georgia) to the complicated and often downright hostile (Azerbaijan). Whether concerns focus on Armenia’s helping Iran evade international sanctions through its banking sector or Azerbaijan becoming a staging ground for Israeli operations against the Islamic Republic, the bottom line is the same: the South Caucasus has become increasingly entangled in the standoff between Iran and its allies (Russia) and the West and its allies (Azerbaijan). These additional sets of complicating factors further confound any potential peace building function that Iran could have otherwise performed.   

Meanwhile, the occasional statements from Tehran leave no doubt that many in Tehran still consider the South Caucasus to be a part of Iran’s historical domain, a sphere where deference for Iranian interests is expected if not vocally demanded. In August 2011, General Hassan Firouzabadi, the Joint Chief of Staff of Iran’s armed forces, famously lambasted the Azerbaijani government for its secular policies and ties to Israel. In an explicit threat, Firouzabadi warned of insurrection in Azerbaijan by stating that “Iranian blood flows in the veins of the people of [Azerbaijan] and their hearts beat for Islam.”

While it is convenient to dismiss such expressions as mere rhetorical brinkmanship on the part of ideological firebrands in Tehran, the fact of the matter remains that such realities continue to prevent the minimum trust that Tehran needs to build up with the authorities in Baku.  To do this, Tehran first and foremost needs to more convincingly recognize that the Republic of Azerbaijan is disinterested in its ideological model – the Islamic Republic’s marriage of religion and politics at home and anti-Western policies abroad - but that such differences of opinion need not be in the way of tactical cooperation on a regional level.

To the extent that the Rouhani administration has crafted a policy toward Baku, this appears to be the new Iranian modus operandi. Certainly and despite the arrival of Rouhani, the overall Iranian theocratic political model continues to have little appeal across the Azerbaijani society. As far as Baku is concerned, the Rouhani administration has a chance to reverse some of the misguided policies pursued by Tehran in the past. That was evidently the subtle message from the meeting between President Rouhani and President Elham Aliyev of Azerbaijan in Davos in January 2014 and when Aliyev visited Tehran in April.

On both occasions, Rouhani reportedly expressed a desire on the part of Iran to assist Azerbaijan in its oil and natural gas industries. Expressing a desire for collaboration in any field is commendable but Rouhani and his government can achieve far more vis-à-vis Azerbaijan if they pursued the same narrow and focused approach as they have seemingly begun toward the United States. Instead of zooming on oil and gas cooperation – a field where Baku has already had great successes in the last 20 years and has established foreign partners – Tehran can introduce new initiatives where its capacity to make a difference does matter. One such initiative can be linked to the frozen conflict over Armenian-occupied Nagorno-Karabakh. 

A genuine mediator

By readjusting its stance and acting as a genuine outside mediator to seek a resolution to the conflict – instead of shadowing a Russian lead which is fundamentally biased in favor of Armenia – Iran can help shake up the status quo. The Armenian occupation of Azerbaijani lands is in the long-run unsustainable but Tehran can still make a positive impact on its bilateral relations with Baku if it can demonstrate that it does have the capacity to practice sincerely neutral policies in that long-standing conflict. To start with, it requires more Iranian pressure on Yerevan to open itself up for a diplomatic resolution and prevent another round of military clashes with Azerbaijan over the fate of Nagorno-Karabakh.

At the moment, Tehran’s ties with Armenia remain close and Iran continues to be a trade and transportation lifeline that Yerevan will not be able to replace should circumstance change. That said, Armenia is overall confronted with a set of daunting socio-economic challenges, including weakening economic conditions and large outflow of citizens who are choosing to emigrate. It would be an exaggeration to call Armenia a failed state but there can at the same time be little doubt that the country’s prospects at the moment are far from promising. From Tehran’s narrow national security perspective, a policy of encouraging Yerevan to reconsider its obstinate stance on Nagorno-Karabakh can actually go a long way in enhancing the long-term stability of Armenia by finally settling the 20-year old dispute once and for all.

Furthermore, regardless of the close history that Iran also shares with Armenia, the fact remains that it is Azerbaijan that has emerged as the economic engine of the South Caucasus. Seen from an Iranian national interest, it is exactly Baku that should be prioritized. Put simply, Russia’s near unqualified political and military support for Armenia might serve Moscow’s goals in the Caucasus but it makes little sense for Tehran to pretend that Iranian and Russian interest in this part of the world overlap.

Assessed more broadly, by simultaneously improving relations with the United States and Azerbaijan, the Iranians can feel far less concerned about the Caucasus as a potential zone of instability where Tehran’s own interests can be at risk. Once it has through concrete action lifted the level of confidence in its relations with Baku, the Rouhani administration can initiate measures aimed at outstanding disputes including the final demarcation of the Caspian Sea where both Azerbaijan and Iran as littoral states are key players and where a regional deal has failed to materialize since the question first arose in 1991.

It is once such steps have been taken that President Rouhani can with more confidence speak of closer joint cooperation with Baku in the energy field or tout the idea of Iran as an outlet point for the landlocked states of the South Caucasus that seek to reach international markets. This is all within the realm of possibility. And Rouhani has himself put the process in motion: By reducing tensions with the United States Iran will be in less need of Russia’s – albeit unreliable – diplomatic support on the global stage and this change in the equation can free Tehran’s hands in the South Caucasus in a way that has the potential to contribute positively to political stability in the region.

Where from here

At a time of renewed American-Russian tensions following Moscow’s annexation of Crimea and intervention in eastern Ukraine, the South Caucasus is once again in the global spotlight. On the one hand, there is the fear of Russian machinations in the region as part of its rivalry with the West. In a worst-case scenario, this might mean Russian attempts to stir tension or even revive the armed conflict between the Armenians and the Azerbaijanis as a way of strengthening Moscow’s geopolitical hand in the South Caucasus. Such a scenario is certainly not in the interest of Iran even though some anti-American voices in Tehran fail to admit to the risks for Iran associated with an assertive Russia that maneuvers unopposed.

At the same time, Russia’s fallout with the West has undoubtedly heightened the potential of the South Caucasus as an alternative energy supplier to world markets. However, to prevent outside machinations to the detriment of the interests of the peoples of the region or to utilize emerging economic opportunities such as those found in the energy sector requires that Armenia, Azerbaijan but also Georgia to increase collective efforts to maintain peace and work toward permanent political solutions to the outstanding territorial disputes in the region. 

Meanwhile, Tehran’s recent advances toward Baku are part of a broader effort to limit Iran’s isolation and prevent Azerbaijan from aiding or joining any potential Israeli or U.S. military operations against its nuclear program. These Iranian anxieties are massively exaggerated. Baku entirely accepts the security risks it would face in the event of a war between Iran and the West, including mass refugee inflows from Iran, inaccessibility to the semi-autonomous exclave of Nakhchivan (an Azerbaijani region sandwiched between southern Armenia and northern Iran), and, in the worst case, direct Iranian military retaliation. Moreover, there is no evidence that Baku would look to an attack on Iran as an opportune moment to realize any irredentist dreams some might have.

Instead, President Rouhani needs to formulate a policy that is independent of Russia’s agenda for the region. Only by doing so can the Iranians help break the precarious status quo that presently exists. On the question of Nagorno-Karabakh, while Iran should continue to support the mediation efforts of OSCE Minsk Group – lacking as they might be – it should cease its neurotic opposition to any Western physical intervention as part of a diplomatic settlement. The Iranians are specifically against the idea of foreign peacekeepers to be deployed to the disputed territories. At the same time, Tehran has made no condemnations of Russia’s long military presence in Armenia estimated at some three thousand troops that are slated to remain in the country until 2044. There is, however, a cause for some optimism that Tehran may reassess some of its previous policy positions.

In the event that Rouhani genuinely help steer his country back to the international mainstream over the next few years, including abandoning the policy of militant anti-Westernism, then it becomes far more likely that Tehran can participate in a process of meaningful mediation between Armenia and Azerbaijan. To begin with, Baku will be far less likely to oppose an Iranian role that is not seen to interfere in its domestic politics or one that shadows Moscow’s bias in favor of Armenia, which has been the case during most of the last twenty years. At the very least, President Rouhani’s pledge of renewal of ties with immediate neighbors should include an even-handed approach on the question of solving the Nagorno-Karabakh conflict.  

There can be no question that the ongoing process of détente between Iran and the United States can radically change the regional political dynamics in the South Caucasus. On the one hand, there are undoubtedly those in Yerevan who see a less isolated Iran as a boon for Armenia and as a way of more easily circumvent the Azerbaijani-Turkish cordon. From an Iranian perspective, however, better ties with Western states should be seen as an opportunity to be less fixated on a Western footprint in the South Caucasus. Instead, Tehran ought to consider such circumstance as an occasion to rid itself of two decades of subservience to Russian interests in the region and a chance to implement a bona fide policy of mediation in a region that still suffers from a number of unresolved conflicts, including Nagorno-Karabakh.

Alex Vatanka is a Senior Fellow at the Middle East Institute in Washington, DC.

Image: president.ir