Restoration of Iran nuclear deal: Implications for Armenia

The 2015 Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action, triggered hope in Armenia for the rapid development of economic relations with Tehran. Armenia has enjoyed close political and economic relations with Iran since gaining independence in 1991. Iran’s balanced position on the Karabakh conflict and the closed borders with Azerbaijan and Turkey contributed to establishing a friendly environment between the two countries. Even the US did not object to certain aspects of Armenia – Iran cooperation, hoping that Iran’s involvement in Armenia will balance growing overdependence over Russia. The launch of the Iran – Armenia gas pipeline in 2007 and the «gas for electricity» deal are examples of successful Armenia – Iran cooperation during the challenging period of sanctions against Iran. As the US and other countries canceled nuclear program-related sanctions against Iran in January 2016, many in Armenia were looking forward to the significant growth in bilateral relations. Armenia opened a free economic zone in Megrhi, near to Armenia – Iran border, in December 2017, hoping to attract international companies to establish production lines in Armenia and export their products to the Iranian market. Armenia’s membership into the Eurasian Economic Union and Iran – EAEU negotiations over the signature of the interim free trade deal seemingly brought these projects close to reality. Armenia launched the construction of the new North-South highway connecting Armenia – Georgia, and Armenia – Iran borders in 2012, hoping to serve as a transit route for Iran – Europe trade.

President Trump’s decision to pull the US out of the nuclear deal in May 2018 and reimpose sanctions on Iran delivered a significant blow to these hopes. After months of resistance, big European companies started to leave Iran under US pressure. Soon it became clear that no foreign company would invest in Armenia to produce and export to Iran. The COVID – 19 pandemic and the 2020 Karabakh war further sidelined Armenia – Iran relations. November 10, 2020, trilateral statement stipulated the restoration of communications in the region, which Azerbaijan interpreted as the agreement to establish the so-called «Zangezur corridor» – highway and railway connecting Azerbaijan with Nakhijevan and Turkey via the Armenian Syunik province. In May 2021, Azerbaijani troops encroached into the Syunik and Gegharkuniq provinces of Armenia.

Azerbaijani demands to establish a corridor via Syunik, and President Aliyev’s threats to open the corridor by force raised significant concerns in Iran. In September 2021, Azerbaijan imposed customs fees on Iranian vehicles traveling to Armenia and arrested two Iranian drivers accusing them of illegally entering Nagorno Karabakh. Iran answered by launching large-scale military drills along with Azerbaijan – Iran borders and stating about the unacceptability of changing international borders. Two sides managed to defuse tensions, but Iran continues to express its objections towards any changes of borders sending signals to Azerbaijan that it would not tolerate Azerbaijan’s attempts to take over parts of the Syunik province and cut Armenia – Iran land connection.

On December 14, 2021, Armenia and Azerbaijan agreed to restore Yerevan – Nakhijevan – Baku railway, which should connect Azerbaijan with Nakhijevan via Armenia, Armenia with Iran via Nakhijevan, and Armenia with Russia via Azerbaijan. However, disputes remain over the legal modalities of the functioning of this route. Azerbaijan claims that Armenia should not implement passport and customs control, otherwise threatening to establish passport and customs control in the Lachin corridor, which connects Armenia with Nagorno Karabakh. Armenia rejects these claims, while Russia probably would like to see only Russian troops controlling the routes connecting Azerbaijan with Turkey via Armenia, using it as additional leverage against Azerbaijan and Turkey.

As a result of the defeat in the 2020 Karabakh war, Armenia lost a significant part of its geopolitical influence and potential. Armenia has given up its role as a security guarantor of Nagorno Karabakh, providing only socio-economic assistance to the region. At the same time, Nagorno Karabakh lost about 75 percent of the territories and was transformed into a de facto Russian protectorate with an unclear future. The Syunik province, which provides the land border with Iran, is now sandwiched between mainland Azerbaijan and Nakhijevan. Within a few weeks after the war, many towns and villages in Syunik found themselves only a few kilometers away from the new positions of Azerbaijani troops, while some territories of Syunik are still under the Azerbaijani control. The economic hardships brought by the war and the lack of security will inevitably increase the emigration rate from Syunik. Given the repeated claims by the President of Azerbaijan that Syunik is historical Azerbaijani lands, that Azerbaijanis will return to Syunik and that the «Zangezur corridor» will unite artificially separated Turkic lands, Armenia faces a real threat of losing Syunik in 15-20 years.

In this context, repeated statements from Iran that Tehran will not tolerate any changes of international borders, and concerns raised by several prominent Iranian experts about Turkey’s growing emphasis on Panturkism in its foreign policy, make Iran a natural partner of Armenia to counter Azerbaijani and Turkish aspirations to establish at least de facto control over the Syunik. The reinstating of the 2015 nuclear deal will make it much easier for Armenia to develop relations with Iran without a negative impact on Armenia – US relations. The US – Iran tensions will continue well after the restoration of the nuclear deal, as the US has significant concerns over Iran’s regional activities and ballistic missile programs. Thus, no one should expect in Armenia that after the US returns to the nuclear deal, Americans will not object to the Armenia – Iran military cooperation or inviting Iranian troops to Armenia for joint drills. However, the reinstation of the nuclear deal will open the way for deeper economic and political cooperation with Tehran.

In February 2018, anticipating the US withdrawal from the Iran nuclear deal, Iran’s Supreme Leader Ayatollah Ali Khamenei declared a policy of “preferring East over West,” thus paving the way for deeper cooperation with Asian powers such as China, Russia, and India. Differently from the “Look East” policy promoted during the presidency of Ahmadinejad (2005-2013), the current Iranian strategy is not only functional to escape the US-led isolation, but it instead seems devoted to the consolidation of a block of powers that can commit to security and economic schemes in alternative to the Western-dominated ones. The victory of Ebrahim Raisi in the June 2021 Iran presidential elections has only strengthened this trend in Iranian foreign policy. During his January 19-20, 2022 visit to Moscow, Raisi held extensive negotiations with President Putin and delivered a speech at the lower house of the Russian parliament, State Duma. He lashed out at the US and hailed the growing proximity between Tehran and Moscow.

Meanwhile, according to several sources, sides are close to reaching a deal during the ongoing nuclear negotiations in Vienna. On January 24, 2021, spokesperson for Iran’s Foreign Ministry told reporters that progress in the talks was headed in the right direction, while a day later, spokesperson for the Iranian government said at a briefing in Tehran that the American side had, through different channels, presented requests for direct talks with Iran and hinted that Iran was ready for them. Given Iran’s «going to East» policy and growing Iran – Russia ties, the potential restoration of the Iran nuclear deal will provide Armenia an opportunity to offer the launching of Armenia – Iran – Russia cooperation format, seeking to use it as the main leverage to counter Turkey’s and Azerbaijani’s strategy to control Syunik and establish a direct land link between two countries. Despite ongoing Russia – Turkey understanding about the Post -2020 Karabakh war security architecture of the South Caucasus, Russia is not interested to see the further growth of Turkish influence in the region. In this context Russian, Iranian and Armenian interests overlap in preventing Baku and Ankara from using the momentum of the 2020 victory to get the upper hand in the region. Iran’s recent decision to establish a consulate – general in Kapan, the capital city of the Syunik province, is another proof of Iran’s interest in increasing its presence there. Armenia should use this opportunity as leverage during its ongoing negotiations with Azerbaijan and Turkey effectively.

Benyamin Poghosyan

Chairman, Center for Political and Economic Strategic Studies (Yerevan, Armenia)

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February 2022
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