Russia and Iran Manage Diverging Interests in South Caucasus

Executive Summary:

• Russian President Vladimir Putin and Iranian President Masoud Pezeshkian signed the wide-ranging Treaty on Comprehensive Strategic Partnership on January 17 to boost bilateral relations for further progress in areas including opposition to NATO expansion, the North-South Corridor, and the 3+3 format.
• Moscow and Tehran, however, also hold diverging interests in the South Caucasus, including differences in the region’s energy and transport sectors.
• Russia has not supported Iran’s railway and gas pipeline construction projects in Armenia, which would diminish Moscow’s influence in the country, despite Tehran and Moscow’s cooperation in building the Rasht-Astara railway to connect to the Republic of Azerbaijan.
• If Moscow and Tehran do not resolve these conflicts of interest to form an aligned approach as they have in Syria and Central Asia, their relationship in the South Caucasus will remain unaligned.

On January 17, Russian President Vladimir Putin and Iranian President Masoud Pezeshkian signed the wide-ranging Treaty on Comprehensive Strategic Partnership (Kremlin.ru, January 17; see EDM, March 13). The treaty is intended to “provide a great boost to the development of bilateral relations and serve as a solid foundation for further progress,” according to Pezeshkian. Putin conveyed the wider relevance of the treaty by claiming that Russia and Iran’s “consultations on the international agenda are in great demand, both in the world as a whole, and in the region” (Kremlin.ru, January 17). This optimism may prove susceptible, however, to challenges in the Russia-Iran relationship, particularly as numerous conflicts of interest and competition between them remain. One of these areas of divergent goals and contrasting relations is Russia and Iran’s approach to the South Caucasus. 

Areas of clear disagreement between Russia and Iran in the South Caucasus include their views toward the independence of Abkhazia and South Ossetia from Georgia, as well as on the military relationship between Israel and Azerbaijan (see Russia in the Middle East, October 5, 2017; see EDM, November 10, 2020, June 12, 2024). Beyond this, Russia and Iran are further divided along the lines of economic and energy cooperation with Armenia, Azerbaijan, and Georgia, particularly in terms of transportation and natural gas exports (see EDM, June 16, 2021, July 16, 17, 2024).

Russia and Iran diverge in opinions toward the proposed Zangezur Corridor between Azerbaijan and its exclave, Nakhchivan. This was evident after Russian President Vladimir Putin visited Baku on August 18, 2024 (Kremlin.ru, August 19, 2024; see EDM, September 12, 2024). After Putin’s visit, Russian Foreign Minister Sergey Lavrov explained that Moscow supports Azerbaijan’s plan for unrestricted access to Nakhchivan through the corridor (Mehr News Agency, September 10, 2024).

This position led to widespread criticism in Iran, because, from Iran’s perspective, the Zangezur Corridor, without Armenian supervision and control, could threaten or block the common border between Iran and Armenia. This would have the important consequence of reducing the number of Iran’s neighbors from 15 to 14. For the past three decades, northwestern Iran has been the only access route between Azerbaijan’s mainland and its exclave of Nakhchivan. Although Iran is not opposed to direct land access between Azerbaijan and Nakhchivan, it strongly opposes the Zangezur Corridor (see EDM, October 14, 2022). 

Iran did not expect Russia to adopt a position similar to Azerbaijan and Türkiye on this issue (Aljazeera Center for Studies, October 22, 2024). Iran’s government warned Russia against siding with Azerbaijan in the border dispute (Mehr News Agency, September 5, 2024). Maria Zakharova, the official spokesperson for the Russian Foreign Ministry, said that Moscow is aware of Iran’s concerns over the Zangezur Corridor and has provided Iran with “all necessary clarifications” regarding Russia’s position (TASS, September 11, 2024). Only Iran remains aligned with Armenia in opposing Azerbaijan and Türkiye’s efforts to implement the Zangezur Corridor (see EDM, October 11, 2023).

Another conflict of interest between Russia and Iran in the South Caucasus is the Aras Corridor between Azerbaijan and Nakhchivan. On March 11, 2022, Azerbaijan and Iran agreed to construct a 55-kilometer (approximately 34-mile) highway and railway route from Aghband to Ordubad (see EDM, May 5, 2022). The village of Aghband is located in Azerbaijan’s Zangilan District near the Iran-Armenia border. The route would pass through Iranian territory to the city of Ordubad in the Nakhchivan exclave. Iran views the Aras Corridor as an alternative to the Zangezur Corridor, which could alleviate its concerns about instability along its shared border with Armenia (see EDM, January 10, 2024; The Central Asia-Caucasus Analyst, February 6, 2024). Despite Tehran and Moscow’s cooperation in building the Rasht-Astara railway to connect Iranian and Azerbaijani railways, Russia has not shown clear support for the Aras railway-highway corridor project, which connects Azerbaijan and Nakhchivan through Iran (see EDM, May 16, 2022, June 7, 2023; Valdai Discussion Club, March 30, 2023, August 8, 2024; Sputnik, February 25). This may be due to the allowance given to Russia to oversee transport links Russia that pass through Armenia, according to the Nagorno-Karabakh ceasefire agreement of November 2020. This agreement outlines that Armenia would guarantee secure transport between Azerbaijan and Nakhchivan, which refers to the Zangezur Corridor. It also stipulates that “[c]ontrol over transport links will be carried out by the Border Service of the FSB [Federal Security Service] of Russia” (Kremlin.ru, November 10, 2020). This means that the Zangezur Corridor could function as a tool of influence for Russia, whereas the Aras Corridor could not. 

Moscow and Tehran also differ in their perspectives toward an Iran-Armenia railway route. In 2009, the Armenian government signed a contract with Iran to construct the “Marand-Norooz-Meghri-Yerevan” railway (see EDM, June 24, 2015; ARKA News Agency, July 24, 2015). This railway project would compete with the South Caucasus Railway, which is the sole railway company in Armenia and is owned by Russian Railways. On February 13, 2008, Armenia signed an agreement to transfer 100 percent of the state-owned Armenian Railways to Russian Railways until 2038 (Eurasianet, Jul 17, 2015; ArmInfo, November 14, 2024). It seemed that Russia’s primary concern at the time was that Armenia’s dependence on Russia was decreasing, and Iran’s economic influence and connectivity in the Caucasus region was increasing due to the construction and completion of the Iran-Armenia railway. Vladimir Yakunin, then-head of Armenia’s South Caucasus Railways, a Russian Railways subsidiary in Armenia, described the Iran-Armenia railway project as ineffectual, tantamount to “opening a window to nowhere” (Arminfo, June 8, 2015). 

Russia and Iran also compete over natural gas exports to Armenia. Tehran and Yerevan signed a 20-year gas-for-electricity swap agreement in 2004, which entered into effect in 2009 (see EDM, November 20, 2024). In 2023, both sides agreed to extend the deal until 2030 (Azatutyun, August 10, 2023). The original agreement detailed the pipeline’s diameter at 1,420 millimeters (56 inches) but was reduced to 700 millimeters (28 inches) in what many suspect to be pressure from Gazprom, which purchased a majority share in the Armenian section of the pipeline through its subsidiary, Armrosgazprom (see EDM, March 20, 2007). If the pipeline had been built at the initial diameter, it would have allowed Iran to export natural gas to Georgia and European markets, competing with Russia’s own natural gas industry (see EDM, March 20, 2007). Further signifiers of discrepancies between Russia and Iran’s interests in the South Caucasus energy sector include the non-construction of the Iranian gas export pipeline to Georgia through Armenia and Armenia’s decision in 2006 to hand over 41 kilometers (around 25 miles) of the Iranian gas export pipeline on Armenian territory to Russia’s Gazprom, allowing Moscow to control all supply routes to Armenia (Eurasianet, Apr 12, 2007; see EDM, November 20, 2024). Subsequent efforts and plans by Iran and Armenia to export gas to Georgia also failed (IRNA, Feb 16, 2016; Eurasianet, March 1, 2019). 

Iran and Russia’s interests and approaches in the South Caucasus are a complex combination of cooperation and conflict of interests. While Russia and Iran continue to maintain a strategic partnership and have common interests in the South Caucasus in various fields, such as opposition to North Atlantic Treaty Organization (NATO) expansion, the North-South International Transport Corridor, and the 3+3 format, their diverging interests in the region pose significant challenges to their collaboration (see EDM, June 16, 2021, March 13, 17). Unless both Moscow and Tehran address these conflicts of interest, their relationship in the South Caucasus will remain unaligned.