The South Caucasus risks becoming the collateral damage of the Russo-Iranian alliance

Iranian kamikaze drones attacking downtown Kyiv on October 17th 2022. Photo: Pazyuk / Shutterstock

Pariahs around the globe – from North Korea to Syria, to Eritrea to Venezuela – find themselves forcibly thrust into the Kremlin’s orbit after being sanctioned and cut off from capital markets. Make no mistake, however, Iran is arguably the greatest example of the malignant forces out there in the world. This is due to how dangerously interwoven fundamentalist Islam is with the tyranny the country’s clerics exercise over the public at large.  Whether Russia or China is the lesser of two evils regarding the existential threat faced by the free world remains up for debate given the comparatively greater geopolitical clout they wield. That said and by virtue of their socialist past, religion has historically taken a back seat and had no real bearing on these states’ internal governance. The Iranian populace, on the other hand, has been dealt an exceptionally raw deal by the zealots who usurped power back in 1979. Besides the masses having their most rudimentary civil liberties withheld, women in modern-day Iran contend with gender apartheid and settle for second-class status at best within an inherently chauvinistic society.

Far from being brushed aside as a domestic affair, the ongoing nationwide demonstrations this time around were a major wake-up call for the western powers, which have long championed female empowerment yet buried their heads in the sand with respect to Iran. If anything, Tehran brazenly throwing its weight behind Moscow by supplying drones and technical assistance illustrates the ayatollahs’ penchant for sowing chaos well beyond the immediate neighbourhood. The Islamic Republic shares land and sea borders with thirteen other countries – all of whom are fair game for a theocratic regime bent on expanding its sphere of influence. In particular, the Persian Gulf sheikhdoms next door have repeatedly sounded the alarm over an Iranian ruling elite that seeks to “export their revolution” by any means necessary. Having failed to do so at the height of the Arab Spring, when regime change was very much possible, and in the decade thereafter, Iran’s sights are now firmly set on the strategically located South Caucasus.

New realities, old rivalries

Already on a collision course with Azerbaijan over Baku’s alleged attempts to redraw its borders in the aftermath of the 2020 Nagorno-Karabakh conflict, the hardline government of President Ebrahim Raisi is not one to let such antagonism slide and carry on with business as usual. After all, Azerbaijan has even incited a separatist movement among Iran’s 20-million strong ethnic Azeri minority. The armed attack on Azerbaijan’s embassy in Tehran last month is widely believed to be an inside job, not least since the subsequent investigation carried out by the local authorities remains shrouded in secrecy, while the assailant appears to have escaped justice. The common denominator at play when it comes to petty sabre-rattling by the Islamic Revolutionary Guard Corps (IRGC) and their surrogate militias across the region is Israel. It is no secret that bilateral ties between the two states have risen to new heights and taken on a multifaceted dimension as of late, so much so that Azerbaijan recently inaugurated its first diplomatic mission to Israel.

Clearly, the very notion of a fellow Shia-majority jurisdiction cosying up to so-called “little Satan” ruffles the feathers of Iran’s jingoistic mullahs. Israel – renowned for its cutting-edge innovation and state-of-the-art military equipment – is ramping up weapons sales and sophisticated spyware provision to the Azerbaijanis with the goal of countering a mutual foe. Meanwhile, Iran’s intelligence apparatus has an oven-ready pretext to launch a cross-border insurgency in the name of protecting national security. This would not be dissimilar to the Kremlin’s nuclear blackmail aimed at dissuading NATO allies from arming Ukraine. Iran’s Supreme Leader Ali Khamenei vowed to exact revenge for the 2020 assassination of the Quds Force Commander Qasem Soleimani and has kept the world guessing as to what his next “chess move” might be. Khamenei remains adamant that the US-led operation to take out his closest confidant in Baghdad had all the hallmarks of Mossad involvement. This, alongside Azerbaijan’s fairly sizeable Jewish community, may render Baku fertile ground for a long overdue reprisal.

Subverting dynastic rule in its backyard has been a key component of Iran’s clandestine foreign policy ever since the late Shah was overthrown in 1979. In the case of Saudi Arabia and the other five GCC monarchies, Tehran’s paranoia stems from their neighbours’ territory being used as a launching pad to propagate American and Zionist interests throughout the Middle East. Needless to say, Azerbaijan is a whole new ball game from the IRGC’s point of view. The Aliyev family has been at the helm ever since Azerbaijan’s independence in 1991 and run the resource-rich Caspian nation as its personal fiefdom. Admittedly, it is not Baku’s kleptocracy or crony capitalism that the Iranians take issue with so much as their constitutionally enshrined principle of secularism. While most western observers hail Azerbaijan as a bastion of modernity that refuses to impose a draconian variant of Sharia law on the masses, Iran sees these liberal policies through an entirely different prism: a Soviet style clampdown on religion with the baton merely passed down from one generation to the next. All the more worrisome is that Iranian youth are beginning to look northwards and appreciate the sheer freedom, as well as the peace dividend, they could potentially enjoy once their country is free from its fanatical leadership.

A marriage of convenience

Under normal circumstances, “big brother” Russia would never entertain the prospect of a third party encouraging extremism in the post-Soviet space. However, Azerbaijan has made no bones about turning its back on Moscow. After all, Baku does not believe that Moscow is an honest broker in the territorial dispute with Armenia. Worse still, there is interest on both sides concerning Brussels potentially supplanting the Kremlin as chief mediator. It is worth recalling that earlier this year, Armenia even declined to host military drills as part of the Russia-led Collective Security Treaty Organisation This organisation is a sorry excuse for a bulwark against NATO, whose only function thus far has been quashing large-scale demonstrations in a handful of former Soviet republics. In essence, President Vladimir Putin has come to a de facto memorandum of understanding with Iran that mirrors what was established with his strongman ally Ramzan Kadyrov following the Second Chechen War. This allows jihadists to have free reign within their own respective territories, so long as their radical ideology does not spill over into the Russian Federation proper. With Iran fast emerging as an indispensable partner in the midst of Russia’s “de-dollarisation” agenda and as a counterweight to prevent Turkey from turning its Baku “brother” into a quasi-protectorate, Putin is content to look the other way and sign off on the Iranians cutting Azerbaijan down to size.

As for Georgia and Armenia, they have both virtually signed their own death warrants. The laissez-faire approach taken by these two governments towards the uncontrolled influx of Russian draft dodgers will cause problems sooner or later. Despite Tbilisi’s macroeconomic indicators looking promising in the last quarter, the capital injection from this new wave of unvetted arrivals has not trickled down to the Georgian populace. Most Georgians are far worse off in real terms and are barely managing to keep their heads above water with the skyrocketing cost of living. The extent to which Georgia’s “European perspective” has dimmed in light of the current administration’s soft spot for Russia and a national cabal of war profiteers, is an especially bitter pill to swallow for the country’s Europhile citizenry. An almost identical phenomenon exists in Armenia, which finds itself hosting not only a great amount of Russian migrants but a huge number of Russian state soldiers. It would be premature to think that budding Iranian exiles are not taking note of the ease with which they can simply breeze into Georgia or Armenia visa-free under the guise of opposing their regime. Much like the detrimental impact the 2015 refugee crisis had on Western Europe’s tourism industry, an overrepresentation of Russians is slowly but surely robbing both fiercely patriotic nations of the authenticity and demographic homogeneity they pride themselves on.

Now that Tehran’s complicity in the war is out in the open, it makes little sense for the collective West to wait any longer before enforcing appropriate deterrence measures. Seeing as Iran is nowhere near as deeply integrated in the global economy as the likes of Russia or China, with the state carrying out direct trade with just five countries according to its Chamber of Commerce, there should be nothing stopping G7 members from throwing everything at the ayatollahs in a bid to starve their state coffers of all viable income streams. The European Union has a golden opportunity to make amends for its botched response to Russian aggression by ruthlessly going after Iran and by extension, challenging pet projects like Beijing’s Belt and Road Initiative BRI and the International North-South Transport Corridor, which Indo-Russian relations now hinge on going forward. At the same time, there are telltale signs of supposedly neutral states gravitating towards the Ukrainian camp purely out of spite for Iran. For example, the Saudi Arabian Foreign Minister Prince Faisal bin Farhan Al Saud recently visited Kyiv, while Pakistan has sent military aid to Ukraine. At the same time, Israel voted in favour of a UN resolution a couple of weeks ago demanding the withdrawal of Russian troops from Ukraine. The clear issues appearing within the Russia-Iran relationship suggest that it is only a matter of time before the apparent allies come to blows. Should this transpire, Transcaucasia will pay the heaviest price and emerge as the most likely proxy battleground for such disagreements. 

Saahil Menon is an independent wealth advisor based in Dubai with an academic background in business, economics and finance.

Azerbaijan, Iran, Russia, South Caucasus