Introduction
Since the Islamic Revolution of the late 1970s, Iran’s foreign policy has often been shaped by Western sanctions and political isolation, firmly limiting its regional influence. Nonetheless, Iran retains a strong strategic interest with its immediate northern neighbors from the South Caucasus region: Armenia, Azerbaijan and Georgia. This, however, is a fine game of policy balancing, particularly given the ongoing conflict of interest between the three countries.
The South Caucasus region serves as a critical geopolitical bridge between Europe, Asia and the Middle East; Iran’s geographic location, bordering both Armenia and Azerbaijan (including the Nakhijevan exclave) and situated along key East-West land trade routes, allows for Tehran to potentially hold an influential role in regional dynamics. Furthermore, the region holds particular significance for Iran as it seeks to counterbalance tense relations with other regional neighbors, such as Turkey and Russia, as well as to secure reliable trade routes. Against this backdrop, Iran’s relationship with the three South Caucasus states has become a focal point of its regional strategy. Thus, Iran has strong strategic interests in the South Caucasus region.
This article aims to conduct a comparative analysis of Iran’s evolving political and legal relationships with Armenia, Azerbaijan and Georgia. In this context, the political relationship refers to diplomatic exchanges, bilateral cooperation, military collaboration, or other similar interactions, while the legal relationship entails any formal treaties, ratified economic cooperation, or of such. By examining both dimensions, the authors seek to identify how Iran’s ties with these three countries differ, as well as to highlight areas where these relationships have the potential to strengthen or weaken in the future.
I. Armenia-Iran
Armenia, traditionally, has had the closest political and legal relationship with Iran. For Armenia, Iran is an important alternative security partner; for Iran, Armenia represents the least complicated way to transit goods through its northern border.
Armenia’s amicable relationship with Iran stretches back in time to when Armenia was a part of the Persian Empire, sharing cultural ties and long-standing interactions, for instance, through trade. This presence is highlighted by a sizable Armenian community in Iran – recognized as a separate religious community with constitutional rights. Since Armenia gained independence from the Soviet Union, the political and legal relationship has only gotten stronger.
From a political perspective, a stable Armenian-Iranian relationship is almost entirely in Tehran’s interest given its more tense relationship with its other two northern neighbors – Turkey and Azerbaijan. By maintaining warm relations with Yerevan, Iran can secure regional trade routes towards Georgia and Russia, further ensuring some sort of accessibility to the Black Sea. The Nagorno-Karabakh conflict signaled closer Armenian-Iranian political coordination with Tehran’s explicitly voiced concerns over Turkish and Israeli involvement in the South Caucasus. However, Iran has tried to abstain from as much direct involvement as possible given its huge Azeri population and economic cooperation with Baku.
Armenia and Iran have undergone numerous economic agreements and infrastructure projects since formal diplomatic ties were established in February 1992. According to the Armenian Ministry of Foreign Affairs, more than 190 international treaties, agreements, memorandums and protocols, encompassing various areas of bilateral relations, exist between the two; most prominently in the spheres of energy, transport, environmental protection, inter-regional, scientific-educational and cultural. Some of the most significant economic relations between the two include the Iran-Armenian gas pipeline (since 2007), gas-for-electricity deals and a prospect of Iran joining the Eurasian Economic Union through Armenia. Armenia’s energy cooperation with Iran has proven important as Yerevan attempts to diversify its near-to-total reliance on Russia.
II. Azerbaijan-Iran
While it is often assumed that close cultural historical, cultural and religious links would foster strong relations, the political relationship between the Republic of Azerbaijan and the Islamic Republic of Iran has proved almost the opposite. Characterized by a continued seesaw between cooperation and conflict, it has become clear that since its independence from the Soviet Union, Azerbaijan has strategically turned towards NATO-member Turkey instead of fostering relations with Iran. One major deciding factor in this was Tehran’s neutrality in the First Nagorno-Karabakh War. This neutrality continued throughout the 30 years of ensuing conflict and beyond; Iran has also become increasingly weary of the so-called “Zangezur corridor”, as this would imply a bypass of Iranian by-land trade routes which inevitably signals a reduction of Tehran’s role in regional connectivity. Tehran has expressed that any geographic adjustments in Armenia’s Syunik province will lead Iran to put their foot down, as all developments are closely monitored by Iranian officials; these sentiments highlight Tehran’s determination to retain geopolitical relevance in and for the South Caucasus.
Iran’s distrust stems mainly from Azerbaijan’s military cooperation with Israel and Turkey, and continued coordination with the West. Military exercises and shows of force along the border, such as Iranian military drills in the north-western parts of Iran in October 2021 and alleged Israeli intelligence presence near Iran’s northern border, showcases mutual capability and suspicion. Tensions peaked with an attack on the Azerbaijani embassy in Tehran in 2023, labelled by Aliyev as a “terrorist act”, accusing Tehran of supporting hard-line Islamists. Moreover, there have been frequent espionage scandals and consequent arrests in Azerbaijan, accusing Iran’s intelligence of accessing sensitive information.
Furthermore, although both countries have a significant Shi’a Muslim majority[i], since its independence, the Aliyev regime has focused strongly on promoting a secular state, most likely to align closer with Ankara and more broadly, the West. This stands in direct contrast with Iran’s theocratic model and has often led Tehran to attempt to make use of religious soft power – including, among others, the funding of Shi’a clerical institutions and dispatching Iranian clergymen to Azerbaijan to promote their shared majority religion. Baku has often stepped firmly away from this religious intervention, afraid of religious polarization. This includes a constraint on Iranian missionaries of exercising their preaching activities as they used to and an operational ban on Azerbaijani Imams who had received their education in Iranian Seminars. It has become clear that Iran deeply fears separatism among its huge Azeri population, which stems from, for example, the promotion of a pan-Turkic identity by Turkey and Azerbaijan[ii], and the use of irredentist rhetoric by Baku – e.g., the reference to “South Azerbaijan” for northern Iranian regions. Azeri’s constitute roughly 15-20 million of the Iranian population, making it the largest ethnic minority group, and are concentrated in north-western provinces.
Despite rocky political relations, economic pragmatism often prevails and includes the North-South Transport Corridor (INSTEC) framework, energy-related trade, and shared interests in a customs transit route and bilateral trade. These economic engagements have often acted as a stabilizing factor, offsetting any political friction. Legally speaking, the key point of contention has been the legal status and delineation of the maritime borders of the Caspian Sea, desired by both Azerbaijan and Iran for oil and gas resources. While the former is advocating for a division according to the UN Convention on the Law of the Sea[iii], the latter is arguing that the sea should be divided into five equal parts. There has also been no cohesive policy on sharing oil and gas revenues. Although the 2018 Convention on the Legal Status of the Caspian Sea was signed, it did not fully establish maritime borders, leaving both Azerbaijan and Iran yet to find consensus on maritime delimitation.
To sum up, Iranian-Azerbaijani political relations remain precarious, while economic interest has often saved the two from complete diplomatic fallout.
III. Georgia-Iran
There is very little in the way of tensions between Georgia and Iran, since the historical contact between the two countries has been limited compared to the other South Caucasus nations of Armenia and Azerbaijan. Georgia and Iran did engage in some pre-modern trade and economic relations, but these never developed into deeper ethnic interlinkages. Since independence, relations between the two states have warmed somewhat with the relationship growing especially closer in the last five years. As the ruling party of Georgia named Georgian Dream has embarked on a more anti-Western foreign policy and a domestic authoritarian crackdown, they have found common cause with Iran to cooperate further on security and investment policies. The two states are currently on an anti-Western political trajectory, which has meant that lawmakers have sought more meaningful political ties. Arguably, Iran has seen Georgia’s drift away from EU integration and its implementation of “foreign agent” laws as an opportunity to extend its sphere of influence towards the South Caucasus, building a diplomatic foundation of a shared perception of western interference in domestic affairs.
The main diplomatic signal that the two countries are enjoying warmer relations came in May 2024, when the Georgian prime minister Irakli Kobakhidze made an unannounced visit to Tehran to attend the funeral of former Iranian president Ibrahim Raisi. During the funeral (which featured chants of “Death to America” and “Death to Israel”) Kobakhidze praised the “friendly atmosphere” between Georgia and Iran.
As of 2025, there have been forty-seven bilateral treaties signed between Iran and Georgia. They have signed a treaty on avoiding double taxation and also a treaty on bilateral investment that came into force in 2005, so there is scope for further cooperation in investment.
For the moment, both countries appear to be content with increasing strategic investments and deepening political ties, but there is a question mark over how long this realignment will last. There are currently nightly protests against the current pro-Russian government and Georgian society is divided between a pro-West/pro-Ukraine orientation and a pro-Russian faction. It is unclear that Georgian society holds much sympathy for Iran, considering that Iran has been supplying Russia with Shahed drones that have been used to bombard Ukrainian cities daily. Given the Georgian public’s long-standing support for Ukraine, this could be a significant sticking point in resetting relations. If a pro-West government were to return to power, it is quite unlikely that the progress that had been made in deepening political and economic ties between Georgia and Iran would last. Even under the current trajectory, the Georgian government may feel more constrained in its ambitions to increase cooperation with Iran in the short term due to the ongoing domestic political instability in the country.
Comparative analysis
I. Strategic Value to Iran
Perhaps the most long-standing and reliable partner to Iran has been Armenia. Despite religious and ideological differences, history has shown that the two share an interest in fostering cooperation. For Iran, Armenia provides a geographic bridge to Georgia and, accordingly, to the Black Sea. Armenia also provides the geographic link via other trade routes, including the North-South Transport Corridor or potential links between the Persian Gulf-Black Sea transport initiative. Tehran barely views Yerevan as threatening, given its non-alignment with anti-Iranian powers. Furthermore, their history of positive cooperation means that Armenia and Iran have the strongest relationship out of all the South Caucasus countries. The fact that relations have not been adversely affected since the change of regime in Iran in 1979 demonstrates the closeness of the ties between the two countries. Azerbaijan proves to have a more spasmodic relationship with Iran. Tehran views Baku as much more threatening given its political and military alignment with both Turkey and Israel, as well as its secular posture in world politics, conforming to the Western standard. The large Azeri population in Iran, capable of organizing powerful protests against anti-Azeri actions by Iranian officials, have increased the fear of separatism. Iran retains only an economic interest in the country, which is highlighted by continued bilateral trade. On the other hand, Georgia provides a huge new interest for Iran as it provides direct access to the Black Sea and thus to European markets. With Tbilisi’s government backsliding to a more anti-Western sentiment, Iran has been building friendlier relations. However, time will tell whether this is truly a partnership based on shared values or temporary shared interests.
II. Bilateral Political and Diplomatic Alignment
Historically, Iran shares the warmest and most relatively consistent relations with Armenia. This is substantiated by high levels of diplomatic coordination and regular high-level meetings. Since Armenia’s independence, when they were directly plunged into conflict over Artsakh, Iran categorically hindered Azerbaijan’s and Turkey’s efforts to “give a religious coloring to the Karabakh War”. This consistency was seen throughout the 30-year conflict, when Iran has been seen opposing Azerbaijani claims and protecting Armenian territorial integrity. Although Iran does not entirely align with Armenia, its explicit sympathy towards Armenia in light of its close-knit cultural, religious and demographic relationship with Azerbaijan speaks volumes. On the other hand, political relations with Azerbaijan remain more volatile. It appears their relationship is built on economic pragmatism, which has often prevailed. Politically speaking, each has closer relations with the others’ rivals than with each other. Lastly, Georgia again seems to hold more of a middle ground. Political and diplomatic relations have steadily been improving over recent years, highlighted by the Georgian PM’s unexpected attendance at President Raisi’s funeral in 2024.
III. Legal Frameworks and Economic Cooperation
Iran currently holds over 190 bilateral treaties with Armenia spanning sectors like energy, trade, infrastructure and more. Although Azerbaijan and Iran undergo some legal cooperation, much of it is obstructed by a lack of clarity and consequent disputes, such as the Caspian Sea demarcation. However, in April 2025, Iran and Azerbaijan signed seven treaties aimed at expanding cooperation in fields such as cultural exchange and political consultation and transport. Georgia and Iran share dozens of treaties, most of which have surfaced in recent years. While political rapprochement has been significant, Georgian economic relations with Iran have also flourished. Trade with Iran has also tripled over the past 12 years, Iranian tourists in Georgia have doubled, companies registered by Iranian citizens in Georgia have doubled, and foreign direct investments from Iran to Georgia have quintupled.
Conclusion
Iran’s relationship with the three South Caucasus nations is complex and changes depending on the political context. Arguably, Iran has a genuine affinity only with Armenia, which is based on a shared history and a long tradition of toleration and mutual cooperation. With the other two South Caucasus countries, there is more realpolitik at play. Iran cooperates with Azerbaijan whenever necessary, but is mindful of its potential destabilizing influence in its northwestern provinces. Furthermore, while cooperation with Georgia has been growing steadily for the last few years, there is no guarantee that this will continue.
Overall, there can be cautious optimism in Tehran over its relationship with the three South Caucasus countries. There are significant economic opportunities for Iran to seize by being able to export to the Black Sea, and the Armenian “Crossroads of Peace” project offers Iran a meaningful chance to deepen economic integration with the region. In fact, Iranian companies are already taking part in the construction of one of the main transport corridors. However, there are also threats to Iran’s strategic interests in the region. A peace deal between Armenia and Azerbaijan would reduce Iran’s influence in the region, since Armenia would not be as dependent on its larger neighbor for security cooperation. Furthermore, the escalation in rhetoric between Azerbaijan and Russia poses another threat to Iran, as Russia is an important strategic partner for Iran.
In summary, Iran has increasing chances and threats coming from the South Caucasus direction. If the political winds in Georgia continue to blow in Iran’s favor, then there is a decent chance of increased cooperation in the economic and political spheres to Tehran’s benefit. If not, Iran’s room to maneuver in the South Caucasus will be more limited than in the past.
Article written by Adelina Drauschke and Conor Scannell, Intern Research Assistants at the Research Center on Security Policy
[i] Azerbaijan and Iran are two of the world’s three only Shi’a Muslim-majority countries; the other being Iraq.
[ii] This activism is intensified by social media and other media outlets, and is often viewed by Iran as an Azerbaijani/Turkic soft power which threatens its internal cohesion. This fear is often translated into crackdowns and suppression of ethnic Azeri activism, met with a negative response from Baku.
[iii] Territorial sea as well as Exclusive Economic Zones based on distance from their respective lands.
