8 March 2021

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CURRENCY

FAVOURABLE WIND FOR IRAN

Tehran is increasingly interested in joining the process of unblocking regional communications

Author:

15.02.2021

The liberation of Azerbaijani territories from the Armenian occupation and the resumption of full control of Baku over its borders created real opportunities for unblocking regional communications. This issue is part of two trilateral statements signed between the leaders of Armenia, Azerbaijan and Russia and has become one of the main topics of the post-war agenda of regional countries.

The countries are not going to postpone the process indefinitely. Trilateral working group established soon after the agreement reached on January 11, 2021 has already held its first meeting on January 30. Certainly, it's too early to say something specific on the essence of these agreements. It is also clear that not everything will go as smooth as expected. But as the saying goes, the first step is the hardest.

So far the parties have agreed to create expert subgroups for issues concerning railway, road and combined transportation of goods, including security, border, customs, sanitary, veterinary, phytosanitary and other types of control.

If the trilateral agreements are actively implemented, then we will soon can talk about the beginning of the difficult process of restoring transport links with concrete results. Azerbaijan has already started intensive restoration works on its territory. This creates certain incentives not only for the participant parties, but also for other neighbours of Azerbaijan.

 

Azerbaijan as a gateway to the South Caucasus

Surprisingly, the first meeting of the trilateral working group in Moscow coincided with a large-scale regional tour of the Iranian Foreign Minister Mohammad Javad Zarif to Azerbaijan, Russia, Armenia, Georgia and Turkey. According to the Iranian minister, the purpose of his trip was to promote the 3+3 format, which opens up new horizons for cooperation between the three countries along the borders of the South Caucasus with three regional participants.

Azerbaijan was listed as the most important and first country in Mr. Zarif’s tour. This is understandable, because more than 90% of Iran's borders with the South Caucasus goes along Azerbaijan in addition to the maritime border through the Caspian Sea, through which Iran can also access the Caucasus. Azerbaijan is Tehran's leading trade and political partner, as well as an important area of multimodal transit transportation.

Apparently, Tehran becomes increasingly interested in unblocking communication routes in the region and large-scale works to restore the liberated territories of Azerbaijan. For Iran, the issue of cross-border cooperation with Azerbaijan is of particular importance, as it brings considerable benefits to both sides. Thus, a modern road infrastructure has been created and operated in Astara, including a customs terminal, which ensures the transportation of a wide variety of goods and the implementation of logistics operations. The terminal is an extremely important part of the infrastructure of the North-South transport corridor. In Nakhchivan, a large hydroelectric complex has been operating for many years on the Araz River. The 44 MW hydroelectric power plant supplies electricity on a parity basis to both Iran and Azerbaijan, while the nearby Araz reservoir is used for the irrigation of 400,000 hectares of land in Azerbaijan and Iran.

The Khudaferin and Gyz Galasy water facilities should also be jointly used with Iran. A memorandum on these projects was signed back in 1988 between the USSR and Iran. However, due to the collapse of the USSR and the occupation of the 132-kilometer section of the Azerbaijani-Iranian border by Armenia, the implementation of the agreement had to be postponed. On February 23, 2016, during the official visit of Azerbaijani President Ilham Aliyev to Iran, both countries signed an agreement resuming the project. In fact, the document confirmed the legitimacy of the Soviet-Iranian agreements, to which the parties intended to return after the de-occupation of the territories and the restoration of control by Azerbaijan along the entire section of the border with Iran.

Immediately after the end of hostilities, Iran proposed to Azerbaijan to accelerate the implementation of the agreements reached four years ago. By the end of December 2020, it became known that the parties had resolved financial issues related to the construction of the Khudaferin hydroelectric complex. The facility will process 1.6 billion cubic meters of water annually for an area of 120,000 hectares. In addition, the Khudaferin and Gyz Galasy plants will be able to generate 280 MWh of electric power, which will undoubtedly contribute to the early restoration of the liberated regions.

In January 2021, the 14th meeting of the Azerbaijani-Iranian bilateral intergovernmental commission was held in Tehran, where the participants discussed new projects. Obviously, Iran shows an active interest to projects, trying to take advantage of the new conditions developing in the region. First of all, the development of transit corridors.

Despite the pandemic and lockdown measures introduced in 2020, the cargo traffic along the Astara (Azerbaijan) - Astara (Iran) railway has increased by 25%. In addition to existing projects in the transport sector, it was decided to start implementing new ones. In particular, the construction of a new road bridge on the border, which will connect the Baku-Astara highway with the Ardabil-Astara-Rasht highway. Equally important is the implementation of the project for the construction of a railway terminal near the city of Parsabad, where it is planned to build a railway from the city of Ardabil. 25 km of the railway has already been constructed. In the future, through a railway crossing, this line can join the Horadiz station.

During his tour, Mr. Zarif also visited Nakhchivan, where he could also discuss the opening of a railway crossing between the Iranian and Azerbaijani Julfa. The route will make it possible to implement transit communication through Nakhchivan and Armenia with access to the Black Sea ports of Georgia.

The agreement on unblocking all communications gives Tehran the opportunity, without resorting to the expensive and unprofitable project of laying a railway line from Armenia to Iran, to return to traditional and more reliable means of communication.

 

Armenian agenda of Iran

Both in Baku and Yerevan, the Iranian Foreign Minister focused his attention on the opening of transport communications. In particular, in his interview with Azatutyun radio following the results of his talks with his Armenian counterpart, Mr. Zarif stated that official Tehran sees a real prospect of connecting the railways of Armenia and Iran through Nakhchivan. At the same time, he tried to find out how stable and long-term the established peace appears for Yerevan. While the Azerbaijani President Ilham Aliyev said that the Azerbaijani side would make every effort to ensure stable and long-standing peace in the region, the same determination was not clearly noticeable in Yerevan.

Moreover, the statements of the Armenian Foreign Minister showed obvious dissatisfaction with the results of the military campaign and a desire to play back the situation. “Our region is facing new and serious challenges as a result of Azerbaijan’s dangerous attempt to resolve the Garabagh conflict forcefully. Armenia does not believe that the results of Azerbaijan's aggression and use of force against Artsakh can create a basis for long-term peace or be viewed as an opportunity for regional cooperation,” Armenian minister said.

It is unlikely that Tehran could be satisfied with this statement. After all, it is important for Iran, which is under the pressure of sanctions, to have a clear vision of the region's way out of the conflict situation. With no available options, building long-term relationships with partners does not seem promising. It is no coincidence that after the war Iran did not sign a single agreement with Armenia, did not show any sign hinting at its intention to implement any significant economic projects.

Armenian experts have to admit that for many years Armenia has tried to implement joint projects with Iran, but most of them have remained on paper. “Talks about the joint construction with Iran of a hydropower plant in Meghri have been going for almost 8-10 years to no avail yet. In contrast, Azerbaijan has been implementing various projects for many years with concrete practical steps, improving relations with Iran," expert of the Armenian Institute of International Relations and Security, Iranianist Armen Vardanyan said.

This shows that the Armenian expert community starts to think in more practical categories than diplomats cut off from reality.

 

Georgia in Iran's new plans

According to a number of Georgian observers, the visit of the Iranian minister to Tbilisi was even more vague than his visit to Yerevan.

Apparently, Tbilisi is not against cooperation with Tehran, but it is confused by the proposed 3+3 format because of Russia’s involvement. Although all parties welcome the economic aspect of the opening of new transport corridors between three regional and three non-regional states, Tbilisi has a number of questions to the political aspect of the perspective cooperation.

For example, Georgian President Salome Zurabishvili stated the need for such a format, while the Georgian Foreign Ministry clarified that the issue of political cooperation with one of the members of the six-party format, Russia, is not on the agenda. In addition to contradictions with Russia, Georgian-Iranian relations have had another less obvious constraint in recent years – the US influence on Tbilisi's foreign policy. But with the Biden administration, Washington may turn a blind eye to Tbilisi's participation in joint political and economic projects with Tehran. This creates additional opportunities for both sides that Iran would like to take advantage of.

Thus, according to the Iranian media, Mohammad Javad Zarif asked the Gerogian Prime Minister Giorgi Gakharia to pay attention to "a number of problems in bilateral trade relations and restrictions on transit and transport activities." Observers note that, unlike neighboring countries, the meetings of Mr. Zarif in Georgia were not accompanied by press conferences or briefings. One might therefore assume that there were more complex topics and discrepancies in positions than approaches that suit both sides.

Since 2012, there has been an increase in immigration from Iran to Georgia. In recent years, Iranians have made up the largest group of foreign nationals who have received a temporary residence permit in Georgia. In fact, Iranians make up the largest share (31%) of foreign nationals running business in Georgia between 2015 and 2018.

However, as immigration increased, Georgia tightened the rules for Iranian migrants. A growing number of Iranians have been denied entry and residence permits in the past two years. They became victims of internal anti-immigration policies in Georgia, attempts to suppress transit migration for security reasons.

At a meeting with the Georgian leadership, the Iranian minister pointed out the existence of these issues, calling on the Georgian government to help in solving them.

Nevertheless, Georgia is an important country in the region and building relations with it is an inevitable factor of Iranian foreign policy in the South Caucasus. Despite all the contradictions, the presence of common interests still prevails.

In the new geopolitical realities, neither Tehran nor Tbilisi can ignore the fact that they cannot do without close cooperation with all the regional participants. No matter how you like it, the six-party platform provides such an opportunity.

Either way, Iran is well aware that after Azerbaijan's restoration of its sovereignty has created favourable conditions for all the regional countries. Tehran hopes that the current situation will be long lasting and will adjust its own policy in the South Caucasus as well.



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