With the JCPOA finalized in 2015, Iran seemed to finally build on its potential to become a shaping actor in the South Caucasus. Yet the scrapping of the JCPOA in April 2018 threatens to disillusion those who were optimistic about new trading and investment opportunities. Under growing pressure, the region seems likely to be neglected again by Tehran.
Iran’s calculations
President Trump’s decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA) will likely have long term consequences for the relations between the Islamic Republic and the countries of the South Caucasus. Even though the region is not a priority of Iranian foreign policy, the finalization of the JCPOA opened up new opportunities to deepen economic cooperation and increase Tehran’s diplomatic influence.
The Caucasus is seen as one important part in Iran’s Europe strategy, considering the potential of connecting Iranian gas reserves to the midstream capabilities of the region that lead to the European gas markets. This would immensely diversify Iran’s energy exports and recent statements by Azerbaijani officials suggest that there is a realistic chance of Iran being incorporated into the Trans-Anatolian Gas Pipeline (TANAP).
Should the EU-governments act upon their proposed course and try to protect their trade with Iran from potential US-sanctions, some of the most important economic opportunities could remain. Yet, the US withdrawal with all of its resulting consequences will certainly restrain Tehran’s foreign policy options. It is not yet clear what the new sanctions will look like. Still, it is safe to say that the economic pressure will be enough to force the Iranian regime to limit its investments to the most profitable options. To the detriment of Baku, Yerevan and Tbilisi, these options are predominantly located elsewhere.
Additionally, Iran will be confronted more intensely by the US and its regional allies in the Middle East. Therefore, Tehran will have to continue prioritizing the Middle East when it comes to the allocation of its power capabilities. This becomes a necessity if the regime wants to preserve the strategic depth it achieved over the last years.
A changing picture for Georgia, Azerbaijan and Armenia
The approaching confrontation will also have a diplomatic impact on the Caucasus, considering that Georgia is to a certain degree dependent on Washington for assistance programs and Azerbaijan has come to be known as one of very few Islamic countries with an open strategic partnership with Israel. Beyond that, Tbilisi still harbors some long-term hopes for a NATO membership. In the case of Azerbaijan, a significant rapprochement could potentially lead to a reduction of US investments in its energy sector and Washington could even revert to sanctions against European corporations that do business in Azerbaijan to limit Tehran’s strategic options globally. Both states will therefore have serious incentives to minimize cooperation with Iran so their more important foreign policy goals will not be put in danger.
The potential with regards to Iran’s involvement in Armenia was already in doubt before the JCPOA went into effect. Due to its tremendous leverage over the country’s decision making, Russia is capable of blocking undertakings in Armenia that run counter to the Russian national interest. Even though Tehran and Yerevan announced an increase in gas deliveries from 1 million cm3 to 1.6 million cm3 per day on June 18th, more significant agreements on infrastructure projects still seem unrealistic as long as there are no Russian investments supporting it.
Outlook
Looking at these factors, we can conclude that it is highly unlikely Iran will take the often prognosticated role of a regional great power in the Caucasus alongside Turkey and Russia. Behind the usual rhetoric, it is improbable Iran will be involved in the region beyond projects Tehran views as key cornerstones of its European strategy or as important in keeping its cordial relations with Azerbaijan (Azeris are the most sizeable minority in Iran). The dimension of investment and trade will stay on a comparable level to the pre-JCPOA years. Also, there will not be a significant increase in lobbying on the side of the South Caucasus states for more Iranian involvement due to the growing international pressure and the emerging foreign policy quandaries.
