On January 2025, Russia and Iran formalized a long-term strategic partnership by signing a 20-year Treaty on Comprehensive Strategic Partnership. The treaty strengthens bilateral relations between Moscow and Tehran. Several references to the South Caucasus in the bilateral treaty underscore the profound implications for regional dynamics, particularly for Armenia, which must navigate a complex web of alliances and rivalries in a historically contested region.

The Russia–Iran treaty highlights economic and security cooperation, particularly as both countries seek to circumvent Western sanctions. With the South Caucasus emerging as a focal point for alternative trade routes and military collaboration, Armenia must navigate these shifting dynamics to assert its strategic relevance and balance its engagement with both Western and regional partners. With this balancing act, Armenia can better secure its place in the shifting geopolitical landscape of the South Caucasus.

Regional dimension: South Caucasus as a strategic artery and zone of interests

Russia and Iran’s strategic partnership has significant implications for the South Caucasus, particularly in economic, energy, and political spheres.

For Moscow and Tehran, the South Caucasus is essential for market access and reducing isolation, making regional instability a significant threat. Their investments, outlined below, reflect a strong commitment to securing these trade routes. This deepening cooperation presents both opportunities and challenges for Armenia, Azerbaijan, and neighboring states.

Article 4 of the treaty highlights that the International North-South Transport Corridor (INSTC) is central to their plans, linking Russia to the Persian Gulf via Azerbaijan. However, completing the 162-kilometer Resht–Astara railway in northern Iran, connecting it to Russia via Azerbaijan remains critical to them. Russia has committed substantial resources to this project, including a €1.3 billion loan in 2023 and high-level diplomatic efforts in 2024 to ensure its completion.

The Russia–Iran treaty emphasizes “seamless” transportation, but technical and logistical challenges remain. One obstacle relates to completing the Resht–Astara railway by 2028, and the second is reconciling Russia’s 1,520 mm rail gauge with Iran’s 1,435 mm European-standard gauge while electrifying parts of the route. Regarding energy, Russia and Iran finalized a gas pipeline route through Azerbaijan, with an initial capacity of 2 billion cubic meters per year, expanding to 55 billion without specifying a timeline. This pipeline will help supply northern Iran with gas from its southern reserves and could enable Russian gas to reach the Indian market via the revived Peace Pipeline, a project restarted in 2024 after years of delays. With the projected 55 billion cubic-meter capacity, the pipeline could link Russian energy to South Asia, further enhancing Azerbaijan’s strategic significance.

Article 12 of the treaty outlines two key commitments. First, Russia and Iran pledge to strengthen security in the South Caucasus, though this remains largely theoretical, with no concrete actions announced. Differences persist, particularly regarding transport communications, but a formal security dialogue could provide a framework for cooperation. Second, the article seeks to prevent external interference in the South Caucasus with destabilizing third-party presences, aligning with Russia’s goal of limiting Western influence and Iran’s aim of reducing Israeli presence in Azerbaijan. Separately, both states support the “3+3” regional format to exclude the West from South Caucasus diplomacy. However, while Russia has criticized the EU mission in Armenia, Iran has not made similar statements. Given their differing approaches to regional security, this article could become a source of tension regarding future geopolitical issues.

Implications for Armenia

The new treaty between Russia and Iran has two major implications for Armenia.

First, Moscow and Tehran’s approach to Western influence in the South Caucasus remains a factor to consider in Yerevan’s evolving foreign policy. In January 2025, Armenia signed a Strategic Partnership Charter with the United States. At the signing ceremony, then-Secretary of State Antony Blinken announced plans to deploy a team of US Customs and Border Protection officers to Armenia. However, with the Trump administration cutting federal funding for government agencies, this deployment remains uncertain. Under these circumstances, when the Strategic Partnership Charter will be implemented remains unclear, raising questions about the trajectory of bilateral cooperation.

While Russia has historically opposed Western engagement in the region, recent diplomatic shifts—including a possible thaw in US-Russia relations—further complicate the picture. Meanwhile, Iran’s stance on Western presence has become more pragmatic, particularly when it aligns with its interests in Iran-Armenia cooperation and regional stability. Against this backdrop, Armenia’s anticipated signing of a new partnership agenda with the European Union may draw scrutiny but also reflects Yerevan’s broader strategy of diversifying its foreign ties.

Armenia must clearly articulate its foreign policy objectives and rationale for engaging with regional and nonregional actors to navigate these uncertainties and mitigate tensions. One approach could be for Armenia to participate in the 3+3 regional format, demonstrating its commitment to dialogue on security and economic issues with Russia and Iran while maintaining its broader partnerships. Discussing unblocking regional communications in the 3+3 format may benefit Yerevan, as Iran shares Armenia's approach to this issue. This could strengthen Armenia's negotiating position. At the same time, Moscow and Tehran should clarify what they mean by “interference and destabilizing presence.” The only official nonregional “presence” in the South Caucasus is the EU monitoring missions, one stationed in Georgia since 2008 and one in Armenia since 2023. While Russia has tolerated the mission in Georgia, it has sharply criticized the one in Armenia. Additionally, the treaty could also address Israel’s role in Azerbaijan due to Iran’s long-standing concerns about Israeli–Azerbaijani security cooperation.

The treaty’s emphasis on connectivity projects also affects Armenia’s potential role as a transit nation between Russia and Iran. Azerbaijan currently holds a near-monopoly on regional transit, as key infrastructure—roads, railways, gas pipelines, and electricity corridors—either runs through or is planned to run through its territory. Baku, not Yerevan, is the primary hub linking Russia with Iran and India, with the Resht–Astara Railway and the Peace Pipeline. Armenia must actively pursue inclusion in regional connectivity projects to avoid further marginalization.

One option is positioning itself as a viable alternative within the International North-South Transport Corridor. Given the risks of over-concentrating transit routes through Azerbaijan, Armenia could offer a supplementary pathway via Georgia. For instance, while the corridor’s rail component may pass through Azerbaijan, its highway or air corridor could be routed through Armenia and Georgia, as projected in the Crossroad of Peace. Another unresolved issue is how Russia and Iran will connect their electricity grids through Azerbaijan, Armenia, and Georgia. Here, Armenia can leverage its status as a member of the Eurasian Economic Union to push for the finalization of a common electricity market and the eventual integration of observer states such as Iran.

Sergei Melkonian, Ph.D., Research Fellow, APRI Armenia.

These views are his own.