The Caucasus is the key link in a rapidly developing “value chain” forged by Russia and Iran to circumvent Western sanctions, according to a policy brief published by a Dutch think-tank.
The policy brief prepared by the Hague-based Clingendeal Institute asserts that wars in Syria, Ukraine and Gaza have abetted the strategic partnership between Russia and Iran. Both states have also developed strong ties with an increasingly authoritarian Turkey, a NATO member state. The three states are intent on creating a new economic order in the Caucasus, a region that the policy brief contends is “no longer grafted onto the global liberal market economy.”
Before the Ukraine conflict began in 2022, the Kremlin had long been recognized as the Caucasus’ strategic arbiter. That is no longer the case. Yet, Russia’s diminished ability to project strategic influence “created scope for a tighter web of economic partnerships between itself, Iran and Turkey,” according to the policy brief. The thread that binds the three states together is a desire to keep Western economic influence in check.
“This new geo-economic reality is significant for Tehran because Russian objectives of establishing an independent monetary system, energy market and parallel supply chains outside the purview of Western regulatory frameworks can help break Iran’s isolation,” the brief adds. “Iran can now leverage its geography to facilitate a land-based Russian economic pivot to the Middle East and the Indian subcontinent that bypasses both the Persian Gulf and the Suez Canal.”
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The Russian-Iranian-Turkish partnership began taking shape in 2017, when representatives of the three states met in the Kazakh capital Astana to discuss war-ravaged Syria’s future. The Ukraine war hastened the need for collaboration, especially between Iran and Russia. Israel’s ongoing operation in Gaza “further accelerated this process due to the anti-Israel views that dominate among the political establishments of all three countries,” the policy brief states.
While the incentives for Russia, Iran and Turkey to work on reshaping the Caucasus’ geopolitical and economic landscape are abundant, the policy brief identifies several stumbling blocks, including Azerbaijan’s close strategic relations with Israel and Armenia’s partnership with Iran. The brief notes, for example, that officials in Tehran believe Israel smuggled the drones used to attack nuclear facilities in 2023 into Iran via Azerbaijan. Meanwhile, Azeri authorities believe Armenia relies on Iran as an arms supply conduit.
“The war in Ukraine turned the Caucasus into an economic opportunity, but also rendered its security landscape more fluid,” the brief says. “While the core stakeholders work together to manage this fluidity, they have not yet clearly worked out their roles. The war in Gaza adds both new pressures and incentives to this semi-stable mix.”
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