Armenia-Iran Versus Azerbaijan-Israel: Where Is Russia?

The South Caucasus region has been undergoing a new polarization, with Armenia and Iran increasingly facing off together against Azerbaijan and Israel. Last December’s visits by Israeli Prime Minister Benjamin Netanyahu to Baku and Iranian President Hassan Rouhani to Yerevan are indicative of this trend. But where is Russia in all of this? What are the implications of this polarization for Moscow?
First, Israel is becoming a serious competitor to Russia in arms sales to Azerbaijan, undermining Moscow’s near monopoly when it comes to selling weapons to both Baku and Yerevan. Azerbaijan has imported 85 percent of its arms from Russia, according to last year’s report from the Stockholm International Peace Research Institute. And Russia remains essentially Armenia’s exclusive weapons supplier (see EDM, November 3, 2016). That said, since having been initiated several years ago, Azerbaijan’s deals with Israel in the defense industry amount to a total of $4.85 billion (President.az, December 13, 2016). These sophisticated Israeli arms imports may push Armenia to seek alternatives to Russian-made arms. For now, however, Armenia’s financial and economic abilities are too limited for this option.
Israel’s weapons sales to Azerbaijan undermine the Kremlin’s interest in maintaining a balance of power between Armenia and Azerbaijan. Russia is a strategic ally of Armenia and a strategic partner of Azerbaijan, and it supplies arms to both sides. Last year, following the outbreak of the Armenian-Azerbaijani “four day war,” Russian Prime Minister Dmitry Medvedev stated that Moscow wants to preserve the military balance between the conflicting parties and would continue to supply arms to both. He also opposed arms supplies from other countries to Armenia and Azerbaijan, saying “it would make the situation more complicated” (Rossiya 1, April 9, 2016).
Perhaps it is not accidental that an official delegation led by Russian Deputy Prime Minister Dmitriy Rogozin, who is in charge of arms sales, traveled to Baku a few days after Netanyahu’s visit (President.az, December 16, 2016). Just a day after Rogozin’s and a few days after Netanyahu’s visit, Azerbaijani Minister of Defense Industry Yaver Jamalov announced that an agreement had been reached to buy the missile defense system Iron Dome from Israel (Contact.az, December 19, 2016).
Some sources have erroneously suggested that the Iron Dome deal was Baku’s response to Russia-made Iskander tactical ballistic missiles having been demonstrated in a military parade in Yerevan (Eurasianet.org, December 18, 2016). But in fact, the Iron Dome is not designed to intercept a missile like the Iskander. Rather, the Iron Dome air defense system is able to target short-range rockets and artillery shells fired from distances up to 70 kilometers (Sputniknews.com, December 17, 2016). Moreover, the Azerbaijani army is already equipped with Russian S-300 and Israeli Barak-8 systems, which are capable of countering the high-flying Iskander missiles (Bellingcat, October 20, 2015; Israel Defense, December 25, 2016).
The expensive Iron Dome sale epitomizes Israel’s growing role as a potentially serious challenger to Russia’s lucrative arms sales to Azerbaijan, whose annual defense budget has fluctuated around $3.4 billion throughout 2011–2015. This figure for Armenia has hovered around $430 million (Sipri.org, 2016). During this time, Moscow has sought to balance its supply of weapons to Azerbaijan with subsidized arms transfers to Armenia (Russian International Affairs Council, November 30, 2015).
Second, the developing polarization in the South Caucasus increases Iranian influence in Armenia, which seeks to build relations independent of Russia. This may affect Russia’s dominant position in Armenia. For landlocked Armenia, whose borders with Turkey and Azerbaijan remain shut due to the Karabakh conflict, Iran is a vital partner for cooperation in the energy sector, as well as trade, tourism and the economy. A week after Netanyahu’s trip to Baku, Iranian president Hassan Rouhani paid an official visit to Yerevan. Simultaneously, Iranian Defense Minister Hossein Dehghan warned Azerbaijan against providing Israel with access to the region, which is “something Iran will not tolerate” (RT, December 27, 2016).
Tehran and Yerevan have so far engaged mainly in energy deals, as Armenia imports natural gas from Iran in exchange for Iranian electricity. Yet, trade, commerce, tourism and other areas of cooperation are also on the agenda. “Armenia and Iran can complete a transit line connecting the Persian Gulf to the Black Sea. We can connect the Persian Gulf to the Black Sea through roads and railways,” the Iranian president stated during his visit to Yerevan (President.ir, December 21, 2016). Although such a transit corridor had long been proposed, with the lifting of international sanctions on Iran following the nuclear deal, Tehran is now in a better position to bring it closer to reality.
Russia fears that Iran—as much as the West and Turkey—could undermine Moscow’s predominance in the South Caucasus and particularly in Armenia, according to Eduard Abrahamyan, an Armenian analyst (Cacianalyst.org, March 16, 2016). No doubt the corridor from the Gulf to the Black Sea would allow Armenia to reduce its economic dependence on Russia and ease the consequences of Yerevan’s relative isolation related to the Karabakh conflict. That would, in turn, increase Iranian influence in Armenia specifically at the expense of Russia, since Moscow is the only crucial outside player with serious sway in Yerevan.
It is difficult to predict how Washington’s policy might change under President Donald Trump. But until now at least, the United States government was apparently not opposed to creation of the aforementioned corridor or closer ties between Tehran and Yerevan. The US ambassador to Yerevan, Richard Mills, said that Armenia might even become a “platform” for US-Iranian commercial relations in the future (Azatutyun.am, June 23, 2016). He also said that the United States had long encouraged Armenia “to avoid overdependence on any one party or source,” clearly alluding to Russia (Asbarez.com, February 5, 2016).
Having almost completely lost Georgia following the August 2008 war, the Kremlin wants to avoid losing its influence over the rest of the South Caucasus—Armenia and Azerbaijan. For more than two decades, the Kremlin has used the Karabakh conflict as an instrument to keep Armenia fully and Azerbaijan partially in its orbit (see EDM, November 4, 2015). But as time passes, the conflict is becoming increasingly tricky for Moscow to manage or manipulate (see EDM, May 18, 2016). Under such complicated circumstances, the Armenia-Iran versus Azerbaijan-Israel polarization crystalizing in the region is a source of Russian concern. Ultimately, it may leave the Kremlin with a dilemma of which side to support, or even more precisely, whom to lose: Armenia or Azerbaijan?