Congressional Documents and Publications
December 5, 2012


House Foreign Affairs Subcommittee on Europe and Eurasia Hearing

"Iranian Influence in the South Caucasus and the Surrounding Region.";
Testimony by Alex Vatanka, Adjunct Scholar, Middle East Institute


Chairman Burton, members of the committee and ladies and gentlemen.

Thank you for inviting me to testify before you today.

My focus this afternoon is on Iran's policies toward the South
Caucasus. I will provide a brief assessment of Iran's foreign policy
behavior in this region of the world and how it impacts the interests
of the US and her allies and partners.

First, let me set the regional scene. Iran has deep roots in this
region. Much of the South Caucasus region was historically part of or
heavily influenced by the Persian Empire. In some aspects,
cross-border ties remain significant. Today, there are over twice as
many ethnic Azerbaijanis in Iran (estimated at around 20 million
people) than in the Republic of Azerbaijan. One of the largest
Armenian Diaspora communities is also found in Iran (estimated at
around 80,000 people).

Iran's reach and influence

The close historical, ethnic and religious ties (particularly the
shared Shia Islam with Azerbaijan) should on paper make this region
fertile ground for Iranian influence. Nonetheless, Tehran's record in
this region is at best mixed.

The record is mixed for one key reason: The three countries of the
region - Armenia, Azerbaijan, and Georgia - view their large southern
neighbor through very different lenses. Accordingly, relations range
from intimate (Armenia) to cordial (Georgia) to complicated and often
outright hostile (Azerbaijan).

Before assessing Tehran's relations with these three states, let me
say something about a fundamental factor that shapes Iran's posture
toward the South Caucasus. That pertains to Iran's relations with
Russia. In my view, the regime in Tehran appears to be extremely
deferential toward Russian interests in the South Caucasus, a region
that Moscow still considers to be part of it "Near Abroad."

Why is this reality the case? Given Iran's international isolation,
the ruling clerical-military elite in Tehran appear to prioritize
Russia as the periodic - albeit unreliable - supporter of Iran and
have therefore opted not to challenge Moscow's policies in the South
Caucasus and in Central Asia.

This is of course to the detriment of long-term Iranian national
interests. But the Islamist regime in Tehran is above all driven by
its own narrow set of political goals which are overwhelmingly rooted
in a desire to ensure the regime's survival at the cost of undermining
Iran's national interest. I believe this is the most plausible
explanation behind Tehran's inclination to accommodate Russia above
and beyond, and a conclusion which is commonly accepted by independent
observers in Tehran.

In fact, across the wider Caucasus region, Iran's posture has either
been mute toward Russian assertiveness or Tehran actively complements
Moscow's pursuit of its strategic objectives. For example, the Iranian
regime - a self-declared guardian of Muslim peoples - remained
conspicuously silent during Russian military campaigns in the Muslim
republic of Chechnya.

More recently, Tehran barely reacted after Russia invaded Georgia in
August of 2008. Elsewhere, Iranian policies have actively complemented
Russian objectives. The best example of this is Tehran's close ties
with Armenia, a close ally of Russia, at the expense of
Iranian-Azerbaijani relations.

In other words, if Russian interests are at stake, Iran prefers to
either align its policies with those of Moscow (as is the case with
Armenia) or stay out Russia's path (as is the case with Georgia).

Iran-Azerbaijan standoff

Among the three South Caucasian states, Azerbaijan has been the one
where immediate Russian interests are least sensitive. This reality,
combined with the fact that Azerbaijan is closest to Iran on ethnic
and religious terms, has turned Baku into Tehran's primary target. For
that reason, Iran-Azerbaijan relations are presently the most
turbulent in the region.

When Azerbaijan first emerged as an independent state in 1991, Tehran
was hopeful that this new Shia-majority country would be open to
Iranian overtures and Tehran's Islamist and anti-Western political
model.

This was not the case then in 1991 and the appeal of the Iranian
Islamist model has only weakened in the meantime, a feature which has
been a constant irritant in Iranian-Azerbaijani relations over the
course of the last 21 years.

In fact, Baku early on chose a pro-Turkish and Western-oriented
position. This continues to frustrate Tehran as one of Baku's
strategic goals is to become a close regional partner of the United
States.

Meanwhile, as Azerbaijan has matured politically and become wealthier
thanks to oil and gas export revenues, it has clearly also become
bolder in pursuing its foreign and national security interests. This
is best exemplified by Baku's decision to forge close ties with Israel
and knowing full well that this would anger and further complicate
relations with Tehran.

Azerbaijan has been steadfast and argues that Iran has no basis to
criticize its ties with the Jewish state given that Tehran has long
ignored Baku's pleas to shun Armenia or otherwise accommodate
Azerbaijani security interests.

Azerbaijan-Israel relations, however, are more than merely a knee-jerk
response to Iranian policies. The Azerbaijanis argue that they too
need allies they can turn to meet their diplomatic, economic and
military needs, and Israel is judged as both a resourceful and
reliable partner.

Despite repeated vocal Iranian objections, Azerbaijani-Israeli
relations remain solid. In February 2012, Azerbaijan signed a $1.6
billion defense deal with Israel that included air defense systems,
intelligence equipment and unmanned aerial vehicles.

In my discussions with an array of political figures in Azerbaijan -
from government officials to key opposition figures - I found very
little disagreement on the issue of Baku's close ties with Israel. At
the heart of the matter is an Azerbaijani desire across the political
spectrum for the development of the country's capabilities and
specifically in regards to finding a settlement to the frozen
Nagorno-Karabakh conflict.

As Iran's "Big Brother" approach and pressure toward Baku has failed
to deliver, Tehran is now instead seeking to incentivize Baku with a
new wave of promises of cooperation. This latest approach has been
very noticeable in the last few months, most likely indicating that
Tehran is hoping to prevent further fallout with its immediate
neighbors.

The latest overtures toward Baku need to be seen in the context of
Iran's already isolated position due to its nuclear program and UN
resolutions and sanctions. Nonetheless, despite such Iranian offers,
deep suspicion in relations is highly unlikely to go away in the
foreseeable future.

Perhaps more important than any other factor, Baku shows no sign of
wanting to abandon its pro-US position or its ties with Israel and
certainly shows no sign of wanting to adopt policies that would
appease the ruling elite in Tehran.

The impact of Iranian behavior on US interests and its partners

Throughout the 1990s, one of Tehran's key objectives across the
Caucasus and Central Asia was to prevent an increase of US influence.
This is still an objective, but Tehran's resources are limited and it
is now far more likely to out-source to Russia and China and regional
collective organizations - such as the Shanghai Cooperation
Organization - to realize this objective. This shift is also a
reflection of the undoubted failure of the Iranian Islamist message,
even in countries such as Azerbaijan, with a Muslim and Shia majority.

However, this equilibrium could shift if the Iranian nuclear standoff
continues and if radical entities within the Iranian regime opt to
increase anti-US activities in the South Caucasus as a way to
challenge or confront the US and its allies. There have been some
recent signs to justify such concerns.

Earlier in the year, Azerbaijani officials reported the arrest of
individuals charged with planning to attack US and Israeli and Jewish
targets. As recently as 9 October 2012, Azerbaijan sentenced 22 people
charged with spying for Iran's Islamic Revolutionary Guards Corps
(IRGC) and plotting to carry out attacks against American and Israeli
targets in Azerbaijan. These realities point to Azerbaijan as a
potential battle-ground in Iran's stand-off with the US and her
allies.

On the question of Iranian influence and activities in the South
Caucasus, Armenia and Georgia pose different challenges for US policy
makers.

Given that its borders with Turkey and Azerbaijan have been closed
since 1993, Armenia has become reliant on Iran and Georgia as its sole
avenues to world markets. Iran is also a principal trading partner for
Armenia and Yerevan's economic interests are already harmed by the
sanctions imposed on Iran. It would appear that both Armenia and Iran
would have an incentive to circumvent international sanctions imposed
on Iran, although this is strongly denied by the Armenian authorities.

In the case of Georgia, it is again about whether Iran can use the
country to circumvent international sanctions. Since 2010,
Iran-Georgia relations have warmed and a visa-free regime has been
established between the two countries, increasing the flow of Iranian
tourists and investment to Georgia. The bulk of this traffic can be
expected to be legitimate as Iranian investors and tourists look for
new and affordable destinations and particularly since traditional
destinations such as those in Europe and in the United Arab Emirates
have become less accessible. At the same time, the greater Iranian
access to Georgia is highly likely to be exploited by Iran's
intelligence services for operational purposes although there is very
little concrete material in this regard in open sources.

In conclusion, let me say that Iran's influence in the South Caucasus
does not match its proximity or historical ties to the region. Tehran
insistence on building relations on an ideological and anti-Western
platform is a failed policy. This is best symbolized by the poor state
of relations between Iran and Azerbaijan. And it goes beyond bilateral
ties. Thanks to its ideological intransigence, Tehran has removed
itself as a contender in Caspian Basin energy bonanza. When Tehran has
been able to make inroads in the region - specifically in Armenia and
less so in Georgia - it has done so overwhelmingly because those
states lack alternatives and not because of a convincing Iranian
message.

Mr. Chairman, Ranking Member, and members of the Committee, thank you
again for the opportunity to appear before you today.

Read this original document at:
http://foreignaffairs.house.gov/112/HHRG-112-FA14-WState-VatankaA-20121205.pdf