Tensions between Azerbaijan and Iran have grown rather raw recently in the wake of Baku’s inauguration of its first-ever embassy in Israel. Of course, diplomatic relations between the neighbours have steadily become more and more inflamed and embittered for several years now, with Iran concerned at the declining influence in the South Caucasus it has suffered since the second Karabakh war between Azerbaijan, urged on by Turkey, and Armenia in late 2020. And with a normalisation of diplomatic ties between Tehran and Baku unlikely in the near future, the big question remains unanswered: Is it possible that the tensions could escalate into a large-scale regional conflict?
The war of words between the two countries was aggravated in October 2022 when Iran's Islamic Revolutionary Guard Corps (IRGC) conducted large-scale military drills on its border with Azerbaijan. Baku opted to refrain from responding to the exercises with comments that might antagonise Tehran. However, the situation became even more explosive when, in late January, an Iranian citizen armed with a rifle burst into the Azerbaijani embassy in Tehran, and killed the building’s security chief and injured two of his colleagues.
Unsurprisingly, the incident triggered an outpouring of anti-Iranian sentiment in Azerbaijan and much international condemnation. Yet things continue to escalate. Last week ended with Azerbaijan expelling four employees of Iran’s Baku embassy for “activities… incompatible with diplomatic status” and arresting six men, allegedly linked to the Iranian secret services, whose aim was said by Azerbaijani officials to be setting up "a 'resistance squad' aimed at establishing a Shari'a state in Azerbaijan through armed unrest and the violent overthrow of Azerbaijan's constitutional order".
The real worry is that—despite April 8 bringing a phone conversation between the countries’ top diplomats to discuss “problems and misunderstandings”—Azerbaijan and Iran are now fast descending to the point of no return in their ruptured relations. Neither side shows signs of budging in the standoff. Iran is deeply uneasy at the regional geopolitical eventualities that stemm from the 2020 war over Karabakh. They have significantly limited Tehran’s room for manoeuvre. The military victory strengthened Azerbaijan’s ties with Turkey and Iran's arch-enemy Israel, which, like Turkey, provides Baku with the arms that make all the difference in its fight with Armenia, such as kamikaze and other combat drones.
Tehran will not see the deepening Azerbaijan-Israel partnership, particularly in the defence sector, as anything less than a threat to its national interests. It has several times pointed to alleged "activities of Israeli intelligence on Azerbaijani soil". Then there’s Turkey’s growing move into Iran’s backyard. Seeking from its spoils Karabakh victory, Azerbaijan has aggressively pushed for Armenia to accept a transit corridor across its territory that would link Azerbaijani exclave Nakhchivan, and thus neighbouring Turkey, with Azerbaijan proper. The Iranians regard the prospect of such a corridor, which would run across Armenia’s Syunik province, as potentially erecting a barrier between Iran and its leading Caucasus partner, Armenia.
As the escalation mounts, the Azerbaijan-Israel-Turkey axis strengthens and Iran responds by boosting its support to Armenia as a counterbalance. Both Tehran and Yerevan suffer considerable isolation, the former due to the impacts of heavy US and other Western sanctions, the latter because it has long endured sealed borders with Turkey and Azerbaijan (leaving only the borders with Georgia and Iran operational for trade). Thus their desire for cooperation has long had a logical underpinning.
How effective the influence of big regional power Iran is on behalf of tiny Armenia can be difficult to gauge, but it has to be considerable. During last autumn’s deadly military exchanges between Azerbaijan and Armenia, Armenian state media went so far as to say that it was Iran that prevented Baku commanding its forces to engage in a far more extensive and prolonged military operation against Armenia.
From the Armenian point of view then, it’s clear that Iran's muscle in the Caucasus is essential, as Yerevan could potentially benefit from Iranian military support if Azerbaijan did decide to go for a major military solution to its differences with Armenia and the ethnic Armenians of Karabakh.
Amid unconfirmed reports of a new defence deal between Baku and Tel Aviv taking shape, threats emanating from Tehran even triggered a debate over whether it is conceivable that the Iranians would launch an offensive against Azerbaijan under the guise of "protecting strategic partner Armenia". Moreover, Iran recently agreed to diplomatic normalisations with Gulf monarchies, including Saudi Arabia and the UAE, following the brokering of talks by China. That shift will enable Tehran to step up its focus on the South Caucasus.
However, although Iran is clearly on guard against having a declining influence in the region, it is unlikely Tehran would go for a conventional war with Azerbaijan. Tehran has enough on its hands. Concerns include financial stagnation, social unrest, the sanctions burden and a lack of sophisticated weaponry in some areas (the Iranian air force is counting on Russia agreeing to deliver modern fighter jets, but it’s unclear whether the deal will materialise). All in all, it is difficult to imagine Iran launching a large-scale cross-border war against Azerbaijan, and, should it do so, the responses of the other big backyard player, Russia, and the West, would be hard to predict.
Far more likely is Iranian proxy warfare against Azerbaijan. Iran is not short of experience in such irregular warfare given its longstanding activities across the Middle East. What’s more, as the pre-eminent Shi'a Muslim country, Iran maintains visible influence among Azerbaijani Shi'a radicals, who make easy targets for recruitment by Iran-linked radical organisations, including Huseyniyyun and Liwa-Fatimuyyun, designated as terrorist entities by Baku.
Azerbaijan's recent mass crackdown on an alleged Iranian spy network in Azerbaijan came as no surprise to observers. The mass arrests of Iran sympathisers also came shortly after an Azerbaijani member of parliament, Fazil Mustafa, a staunch critic of Iran, was gunned down in front of his house on March 30, leaving him badly injured.
So are there prospects for a Baku-Tehran normalisation in the foreseeable future? They are dim to non-existent. There are certainly none that have any visibility. On the contrary, Azerbaijan looks set to seek deeper ties with Israel and Turkey, particularly in defence, as Baku desires more military hardware to counter a potential Iranian proxy war. Tehran, meanwhile, will certainly keep throwing its weight around. It will stay right in Baku’s face, but it is unlikely to achieve concessions from Azerbaijan through intimidation and vocal threats. Baku sees no need to go out of its way to achieve a balanced foreign policy concept given the new regional balance of power.
Fuad Shahbazov is an independent policy analyst focusing on regional security issues in the South Caucasus and a Chevening FCDO scholar at the University of Durham School of Government and International Affairs (SGIA). He tweets at @fuadshahbazov