Could escalating Iran-Israel tensions spill into the South Caucasus?

As Iran delays its retaliation to Israel's assassination of Ismail Haniyeh in Tehran, concerns are growing that the escalating tensions could extend beyond the Middle East and into the South Caucasus.

Considering that Tehran has yet to indicate what it will do, potentially due to US involvement, some speculate that Azerbaijan, a close ally of Israel, could be targeted.

Recently, Israeli media reported that the Israeli army had prohibited its soldiers from staying in Azerbaijan and Georgia due to potential Iranian threats. Iran has in the past struck what it claims are Israeli intelligence bases in Iraqi Kurdistan.

While Tel Aviv has not commented on the report, Azerbaijan’s official Media Development Agency denied the presence of any “foreign military contingents” in the country. However, some have interpreted Baku’s air defence drills last week as a show of force against Tehran, which recently conducted naval exercises near their shared border in the Caspian Sea.

Notably, the drills came after a British media report suggested that generals of Iran’s Islamic Revolutionary Guard Corps (IRGC) are advocating for direct strikes on Israeli cities, focusing on military bases to minimise civilian casualties. Iran’s newly elected President Masoud Pezeshkian allegedly suggested targeting “secret Israeli bases” in Azerbaijan, according to the reports.

Underlying regional concern

Even though these media claims could be unfounded, especially given Tehran's current efforts to normalise relations with Baku, underlying tensions continue to haunt the dynamics between the two countries.

Tehran has consistently expressed concern over Israel's military and intelligence presence near the Iran-Azerbaijan border, as Tel Aviv seeks to expand its influence in regions like the Persian Gulf, northern Iraq, the South Caucasus, and Central Asia as part of its strategy to ‘move closer to Iran’.

Tehran has even accused Baku of aiding Mossad in the assassination of Iranian nuclear physicists and conducting reconnaissance activities. When Azerbaijan signed a $1.6 billion arms deal with Israel in 2012, Tehran issued a formal protest to the Azerbaijani ambassador, labelling the sale as a provocative, anti-Iranian move, which led to a diplomatic crisis, including Baku’s arrest of a group accused of spying for Tehran and plotting attacks on US and Israeli embassies.

That same year, Foreign Policy reported that the US had concluded that Israel had been granted access to airbases on Azerbaijani soil for potential military strikes against Iran.

More recently, the historic deterioration in Tehran-Baku relations following the Second Nagorno-Karabakh War provided Israel with an opportunity to strengthen its position as a strategic partner, even proposing the formation of a “united front” to counter Iran.

It’s worth remembering that a US State Department cable released by WikiLeaks confirmed that “Israel’s main goal is to preserve Azerbaijan as an ally against Iran, a platform for reconnaissance of that country, and a market for military hardware”. In other words, Israel has invested heavily in shaping the perception of two opposing alliances: Azerbaijan-Israel and Armenia-Iran.

Despite these occasional tensions, Baku has so far avoided open confrontation with its powerful southern neighbour, recognising that it cannot permanently afford strained relations with Tehran.

This is particularly crucial as Azerbaijan still needs to secure a peace deal with Armenia and is currently facing criticism from the West after retaking the Nagorno-Karabakh region.

Pragmatism in Tehran-Baku relations

Just days after Hamas’ 7 October attack, the two states signed a landmark agreement to establish the Aras corridor, a transit route allowing Azerbaijan access to its Nakhchivan exclave via Iranian territory.

This deal, coming after three years of historically low relations, was seen as a crucial step to avoid a more controversial ‘Zangezur Corridor’ alternative. Ilham Aliyev and the late Ebrahim Raisi even jointly inaugurated a hydropower facility on the Aras River, which forms the border between Iran and Azerbaijan.

In June, the two countries conducted joint military drills - an event unimaginable just a year earlier. A month later, Baku reopened its embassy in Tehran, which had been shut down following an armed attack on the mission in January 2023.

The proposed International North-South Transport Corridor (INSTC), which envisions an ambitious rail route linking India to Russia with Azerbaijan and Iran as key intermediaries, holds particular significance for Tehran.

Beyond strengthening its connection with Russia at a time when the two countries are deepening their economic, military, and political ties, Iran aims to secure access to the Black Sea through the INSTC - a potential major achievement for Tehran in the region.

In this context, while deepening Israeli inroads into the Caucasus remains a point of contention in Tehran, pragmatism centred on regional stability and economic prospects currently drives the relationship between the two countries.

It is worth highlighting that improving relations with neighbouring countries is a top foreign policy goal for the new reformist Pezeshkian administration. Any aggressive move against Azerbaijan would not only end the fragile partnership and push Baku closer to Israel but also create immediate security threats for Tehran, which is increasingly entangled in the crises plaguing the Middle East.

Recognising Baku’s leverage as a crucial player in various trade and energy networks involving major global and regional powers like the US, EU, China, and Russia, Tehran has moved to re-calibrate its approach as it cannot compel its northern neighbour to take a step back from cooperating with Israel. This strategic position enables Azerbaijan to maintain a flexible foreign policy, resisting pressure from any single actor.

Baku has not even hesitated to embrace policies that diverge from those of its key ally, Turkey, as it openly and loudly praises its growing partnership with Tel Aviv.

However, it can be assumed that a direct confrontation between Tehran and Israel is an undesirable scenario for Baku, as it would make it particularly challenging to maintain its delicate balancing act between the two arch-foes.

Additionally, Tehran continues to view the region through a security-focused lens, with any potential use of force by Baku to establish the ‘Zangezur Corridor’ remaining a red line for Iran.

This context is underscored by the frequent attacks by Azerbaijani pro-government media on Mehdi Sobhani, Tehran’s ambassador to Armenia, who consistently voices Iran’s opposition to “any geopolitical changes in the region”.

Rovshan Mammadli is a Baku-based journalist and independent analyst. Holding a BA in Israel and Middle East Studies and an MA in International Policy Studies, he focuses on Azerbaijan’s foreign policy, Middle East politics, and peace and security in the South Caucasus.

Follow him on X: @MammadliRovshan