How does the Iran-Armenia partnership undermine the EU's values? Tehran’s growing paranoia toward Azerbaijan

The outcomes of the second-Karabakh war between Azerbaijan and Armenia in 2020 significantly shifted the regional alliances in the region, such as strengthening ties between Iran and Armenia and strategic partnerships between Azerbaijan and Türkiye. However, unlike the declining influence of Iran, Türkiye managed to increase its soft power and leverage over the South Caucasus region. While the Azerbaijan-Türkiye duo intensified efforts to deepen security and economic partnership, Armenia sought to approach its long-term partner Iran as one of its main security guarantors amid stalled peace negotiations with Azerbaijan.

Undoubtedly, Iran’s destructive policy and provocative position largely neglected the peace talks and increased anti-Iranian rhetoric in Azerbaijan. The diplomatic rifts heightened when several top Iranian officials openly stated that "Armenia's security is Iran's security." Though Iran's military assistance to Russia against Ukraine and proxy warfare against the US allies in the Middle East would set a dangerous precedent for official Yerevan, the Armenian authorities are reluctant to downgrade the cooperation level with Tehran.

As such, on January 27, 2023, the State Revenue Committee (SRC) of Armenia and Iranian-owned Tana Energy Management Company signed an €18,495,000 cost contract on the construction works for modernizing the Meghri border crossing point. İronically, the economic aid for the modernization of the checkpoint has been allocated by the European Bank for Reconstruction and Development (EBRD) in light of Tehran’s mounting escalations with the West after the nuclear negotiations stalled. While the Western funds' flow in Armenia ends up in the hands of an Iranian company, many in the EU prefer to turn a blind eye to the fact that the Islamist regime may use these funds to topple the ongoing civilian unrest in Iran's major cities since October 2022.

Armenia and Iran negotiated the checkpoint modernization project in 2020, but the coronavirus pandemic and the 2020 war in Karabakh with Azerbaijan have delayed the implementation. Among all other companies, Iran’s Tana Energy Management Company was recently declared the tender winner. According to the company, construction work will be completed in 2026.

Iran is a major trading partner of Armenia. The Meghri border checkpoint is of greater importance both for Iran as the main gate that links both countries and processes up to one-third of goods shipped to and from landlocked Armenia. According to Armenian government data, Armenian-Iranian trade turnover in the first ten months of 2022 increased by 45.3%, reaching $565.6 million, while trade turnover with Azerbaijan accounted for $362 million. To compare, the trade turnover with Armenia in 2021 accounted for $410 million, $320 million of which constituted imports of gas, oil products, fertilizers, and construction materials. Reportedly, both states are intended to reach $3 billion in trade turnover in the near future.

Tehran is anxious to cement relations with Armenia as a counterbalance to Azerbaijan-Türkiye and Azerbaijan-Israel partnership format. Iran cautiously watches the growing influence of Ankara and Tel-Aviv in its immediate neighbourhood while witnessing its diminishing influence and leverage over the South Caucasus region. With its assertive and destructive proxy warfare strategy Tehran steadily entered the point of no return. The deteriorated relations with nearly all regional states left no diplomatic space for manoeuvring but to deliberately escalate the tensions under the guise of "national security concerns."

Iran's reliance on intimidation and coercion strategies toward neighbouring states, including Azerbaijan, seemed ineffective under the new geopolitical realities. For example, in 2022, Iran demonstratively inaugurated a consulate in Armenia’s Gafan region, a move that backfired and immensely led to Azerbaijan's historic decision to set up an embassy in Israel after three decades.

On the contrary, the Baku – Tel-Aviv rapprochement progressed successfully and is likely to grow deeper with the new ultranationalist and anti-Iranian government led by PM Benjamin Netanyahu. Hence, on February 1, 2023, Israeli incumbent defence minister Yoav Gallant held a phone conversation with Azerbaijani counterpart Zakir Hasanov and the chief of the border service general Elchin Guliyev, though no specific details of the discussion are known.

Iran uses Armenia as a viable counter-tool against Azerbaijan and the EU to evade some economic sanctions. In this regard, the West must consider its economic cooperation policy with Armenia and demand more transparency in EU-funded tender projects that involve Iranian state-owned companies.