A remarkable event occurred on March 11 in Baku when Azerbaijan and Iran, after a period of turbulence in their bilateral relations, signed a new document establishing new transport and electricity supply links connecting mainland Azerbaijan to its exclave of Nakhchivan via Iranian territory. The Minister of Urban Development of Iran, Rustam Ghasemi, signed the document from the Iranian side. The fact that Rustem Ghasemi had previously paid frequent visits to Azerbaijan to discuss potential economic cooperation with Azerbaijan indicate persistent Iranian attempts to gain at least a minimal political foothold. The signing of a major cooperation document between Baku and Tehran so soon following the heated border tensions in October 2021, surprised some observers.
According to the memorandum, the two countries plan to establish new railway, highway, communication, and energy supply lines connecting Azerbaijan’s East Zangazur economic region and the Nakhchivan Autonomous Republic through the territory of Iran. Four bridges will be built over the Araz River, including two motorways and two railway lines. The new route will be functioning just five kilometers away from the Iranian – Armenia border. The new agreement on Eastern Zangazur came amid renewed debates between Azerbaijan and Armenia regarding the Zangazur corridor running through Armenia’s Syunik province and linking Azerbaijan to Nakhchivan region. Since the end of the 44-day war, Azerbaijan has sought opportunity to gain a direct land route to Nakhchivan and further to Turkey via this territory and promised broad economic benefits to Yerevan, albeit without success. The long debates and negotiations yielded no significant result as official Yerevan categorically rejected to discuss any corridor options.
Azerbaijan swiftly turned to Iran as an alternative option, thus seemingly demonstrating its willingness to establish the long-awaited transit corridor even without using Armenia’s territory. From the perspective of Iran, this agreement will likely enhance its lost position in the South Caucasus in the post-war period and give a new breath to its stagnating economy. Iran’s so called “neutral position” during the second Karabakh war did not secure it a place at the negotiations table in the post-war period, while long-time regional competitors like Russia and Turkey increased diplomatic role and physical presence on the ground.
The Baku – Tehran thaw started in January of 2022 when both sides agreed on joint infrastructural projects targeting increased transit. Following this, on January 25, an agreement for the construction of a road bridge over the Astarachay River at the border of the two countries was also signed. It appears that Azerbaijan and Iran decided to abstain from political statements regarding the regional geopolitical order which remain highly sensitive, t and shift to more pragmatic regional cooperation Agenda.
In light of Russia’s invasion of Ukraine and unprecedented economic sanctions imposed on Moscow by the West, Azerbaijan is keen to minimize economic consequences for itself by individually establishing cooperation formats with regional states. Baku recently held talks with Turkey, for establishing new transit routes such as the proposed Nakhchivan-Igdir natural gas pipeline, on increasing defense cooperation, and on trade turnover. Given the likelihood that the nuclear talks between the West and Iran will be successfully finalized very soon, Iran’s financial abilities will increase. Given all these factors, Azerbaijan’s renewed economic cooperation with Tehran should not come as a surprise.
Tehran had long enjoyed a transit country role between Azerbaijan and Turkey until the outbreak of the conflict in September of 2020. Azerbaijan’s attempts to establish a transit corridor with Turkey via Armenian territory (West Zangazur) caused grievances in Tehran. However, with the new initiative, Iran has re-gained momentum to maintain its position and not to be left as a complete outsider in the region.
In anticipation of the fallout from the mass international economic sanctions recently imposed on Moscow by the West, Azerbaijan is seeking multiple and alternative ways for deepening regional interconnectivity with all regional states, including through attempts to normalize relations with Armenia. Baku’s attempts at normalizing relations with Yerevan can improve the prospect of a final peace agreement without Russia’s mediation and interference. Hence, another essential factor that makes the new Eastern Zangazur transit corridor through Iran critical is the fact that it will not be under Russia’s control, unlike the transit corridor via Armenian (Western Zangazur) territory.
The new transit corridor will renew the partnership dialogue between Baku and Tehran, give new economic tools to Azerbaijan in the region, and bolster trade with its natural ally Turkey. On the other hand, the potential normalization process with Armenia would be an additional asset to further regional stability, and will end Armenia’s ongoing economic isolation.