Washington’s Gamble Against Tehran in the Caucasus: What Are Iran’s Leverage Points?

In a rare and significant development, Nikol Pashinyan, Prime Minister of Armenia, and Ilham Aliyev, President of Azerbaijan, on Friday attended the White House and, with the green light from Donald Trump, signed a peace agreement. The agreement not only ends four decades of conflict between the two countries, but, according to a group of observers, will bring about serious changes to the geopolitical map of the South Caucasus.

According to media reports, the agreement includes a project titled “Trump Path for International Peace and Prosperity,” which will turn the so-called Zangezur Corridor into a multi-modal transit route managed by American companies.

A group of analysts claim that this peace agreement, on the surface, is a diplomatic victory for the United States and Donald Trump himself, but, at deeper levels, constitutes a strategic threat to other actors in the South Caucasus such as Russia, Iran, and even Turkey—countries that for decades have regarded the region as their backyard. Another group, however, has evaluated the agreement from a strategic perspective and contend that Washington’s influence in the heart of the Caucasus not only challenges the Kremlin’s traditional sway but also offers an alternative route for North–South trade, which could affect the transit position of other countries, including Iran. Under this asserted premise, it appears that this peace agreement marks the starting point for redefining the balance of power in the South Caucasus and signals the emergence of new power blocs in the region.

At the same time, some analysts also argue that assigning management of the new route to an American operator is a kind of gamble for Washington—an experiment that could expand U.S. influence from the Caspian Sea to the Mediterranean under multi-layered and potential threats.

In such circumstances, the potential actions of Tehran, Moscow, and Ankara in response to this change could either recalibrate the balance of power or push the situation toward new instabilities. On this occasion, and in order to assess the possible consequences and scenarios arising from Washington’s direct entry into South Caucasus affairs, Hamed Khosrowshahi, a member of the Jaryan think tank and a researcher in the field of the Caucasus states:

While emphasizing that the direct entry of the United States into the management of the Zangezur route could disrupt the traditional structure of alliances in the South Caucasus, also believes that this move will create distance between certain countries and Russia, and may potentially pave the way for new alignments centered on Washington—a process that, according to Khosrowshahi, could lead to geopolitical divergence among the region’s traditional actors. The full text of this interview follows:

Hamed Khosrowshahi, a researcher on the Caucasus, in response to a question about evaluating the impact of the United States’ direct entry into the South Caucasus on the actions of actors such as Turkey and Iran, stated: The simultaneous presence of Nikol Pashinyan and Ilham Aliyev at the White House, in the form of an official meeting with the U.S. President and for the purpose of finalizing a peace agreement, goes beyond the notion of mediating a bilateral dispute, and is in fact a strategic effort to shift the axis of regional influence from Russia to the West. In such a context, the role of Turkey and Iran, the two key players in the region, will be strongly affected by this development.

Khosrowshahi continued: For Turkey, which in recent years—due to its close ties with Baku and strong support for Azerbaijan in the Second Nagorno-Karabakh War (2020)—has managed to consolidate its geopolitical foothold in the Caucasus, the entry of the United States into the highest levels of the Caucasus equation will be perceived as interference in its newly revived backyard. Although Turkey is a NATO member and a Western ally, its relations with the United States have in recent years been consistently tense, and Ankara wishes to remain the leading actor in the Caucasus. As a result, it is possible that Turkey will seek to reconstruct the new geopolitical balance in its favor through parallel initiatives or enhanced engagement with Russia and Iran.

The Caucasus researcher went on to say, regarding the implications of Washington’s new plan for Iran: From Tehran’s perspective, this matter is extremely sensitive. The Islamic Republic of Iran is concerned about any change in the political geography of the region, especially anything that could lead to the creation of the Zangezur Corridor and the severing of Iran’s land border with Armenia. Now that the Americans have proposed a long-term lease of part of the corridor to a private military company, Tehran will regard these developments not merely as a regional challenge, but as a direct threat to its national security. Therefore, Iran’s response could take the form of increased diplomatic pressure on Yerevan, strengthening its security presence along the northwestern borders, and drawing closer to Russia and China within a framework aimed at countering U.S. influence.

In one sentence, this development will not only result in a redrawing of Washington’s role in the Caucasus, but will also inevitably push regional actors such as Iran and Turkey toward reacting and redefining their interests and instruments of influence in the region.

Khosrowshahi, in response to another question regarding the potential consequences of the alleged U.S. proposal for the two principal actors in the Caucasus—namely Armenia and Azerbaijan—as well as Russia, emphasized: “This proposal entails costs for both Azerbaijan and Armenia, and its acceptance will depend on a precise calculation of strategic interests in the context of pressure from regional players. From Baku’s perspective, the transfer of management of the corridor to a third party would, on the surface, be perceived as a form of security guarantee for the sustainable operation of this strategic route. Azerbaijan, with its long-standing mistrust of Russia—especially in recent times—is now seeking to consolidate its geopolitical gains.”

In this framework, oversight by an American or European entity may be regarded as a guarantor of neutrality and the continuation of the post-war order. However, Khosrowshahi believes Baku should also be concerned about a strong reaction from Moscow—one that could take economic, energy-related, or even military dimensions. Armenia, which for years has vacillated between traditional dependence on Russia and aspirations for closer ties with the West, may view acceptance of this scenario as a step toward securing independence from Kremlin influence. Although U.S. involvement would likely be appealing to Prime Minister Pashinyan and his Western-oriented circle, such a decision carries the risk of losing Russian security backing and provoking negative domestic reactions, including from the pro-Moscow opposition.

The Eurasia expert further stated: “If this plan materializes, Russia’s reaction will be both significant and likely. The Kremlin—particularly in the aftermath of the Ukraine war—is highly sensitive to any reduction of its strategic depth in its traditional backyard. The withdrawal of Russia from the position of monitor in the Zangezur Corridor would amount to relinquishing a vital concession to the Western bloc. Such a development could be met with measures including diplomatic pressure, unofficial sanctions, the incitement of ethnic minorities, or even limited field actions.”

In response to another question concerning the implications of the American scenario for the management of Zangezur on Iran’s role, Khosrowshahi stressed: “The Islamic Republic of Iran must also prepare itself for these new developments. The change in the corridor’s management and the informal establishment of American security or intelligence entities in direct proximity to Iran’s borders—especially following the recent U.S. attack on the country’s nuclear facilities and Iran’s missile response against an American base in Qatar—constitutes a strategic threat.”

According to Khosrowshahi, Iran possesses several levers to counter such moves. The first is a geopolitical lever, whereby Iran can utilize its geographical position as an alternative transit route for Armenia and Eurasia, thus reducing the attractiveness of the western corridor. The second is regional convergence—deepening cooperation with Russia and China, particularly within frameworks such as the Shanghai Cooperation Organization or through routes parallel to the Belt and Road Initiative, could create a counterweight to the Western plan.

The researcher further noted: “The third lever is multi-layered diplomacy. Iran can employ economic and security diplomacy to influence Yerevan, capitalizing on Armenia’s continued mutual dependence on Tehran. Another instrument is asymmetric deterrence—strengthening military and security presence along the northwestern borders, coupled with maintaining intelligence capabilities, could constitute a form of soft yet effective deterrence. Ultimately, Iran must closely monitor developments, avoid impulsive reactions, and move toward active and preemptive management of regional dynamics—because the Caucasus game is not merely a border dispute, but part of a broader competition involving China, Russia, the United States, and regional players with intersecting interests.”

In response to a question regarding the impact of direct U.S. presence on the Caucasus’ balance of power and the possible emergence of geopolitical divergence in the region, Khosrowshahi observed: “The likelihood of redefining security, political, and economic mechanisms in the South Caucasus by the United States is not unrelated to the recent accelerated developments in the region. The simultaneous presence of the Armenian Prime Minister and the Azerbaijani President in Washington—and the talks said to focus, among other things, on transferring oversight of the Zangezur Corridor to an American company—are clear indications of U.S. efforts to shift from peace mediator to architect of a new security order in the Caucasus.”

In this process, the U.S., exploiting the void created by the Ukraine war, Russia’s weakened position, and Armenia’s crisis of trust toward Moscow, is designing a new arena that challenges the region’s traditional power dynamics. According to Khosrowshahi, if this scenario comes to fruition, a reconfiguration of regional and extra-regional actors in the Caucasus will be inevitable. The U.S. and certain European allies will likely seek to form a multilayered participatory framework with Armenia, Azerbaijan, and possibly Georgia—covering economic aspects (such as transit and energy routes), security aspects (via private military companies or monitoring missions), and political aspects (alignment with Western values).

This framework will not necessarily be a formal alliance but will function as an expanding “soft NATO,” gradually steering the Caucasus’ decision-making system toward a more Western-oriented direction. The Eurasia expert added: “In the face of this trend, a united stance among the countries dissatisfied with such intervention—namely Iran, Russia, and China—is not unlikely. Moscow, from the perspective of safeguarding its traditional sphere of influence; Beijing, due to the threat posed to the Belt and Road Initiative; and Tehran, given border, security, and the prospect of U.S. presence in its neighborhood—all face direct threats.”

For this reason, these three countries, despite differences in tactical approaches, may move toward shaping a strategic response in areas such as joint infrastructure projects, political maneuvers, or intelligence coordination. According to Khosroshahi, although it is unlikely that this response will take the form of a formal alliance, parallel and overlapping actions could complicate Washington’s calculations in the region. The role of actors such as Turkey and the Republic of Azerbaijan will also be decisive in this regard.

Ankara, a NATO member that nonetheless maintains close relations with Moscow, occupies a strategic position that enables it to act as a balancing player at critical moments. Baku, meanwhile, due to its close ties with Israel and the West while simultaneously maintaining proximity to Tehran on certain issues, finds itself caught in a duality between economic gains and geopolitical considerations. This situation increases the likelihood of a form of fluid geopolitical divergence in the Caucasus, where actors position themselves not on the basis of traditional alliances, but in line with momentary interests. This senior Caucasus researcher further told that, overall, the South Caucasus is on the verge of a historic transition.

If the scenario of redefining the regional order by the United States, with the cooperation of Armenia and Azerbaijan, proceeds, it may, for the first time in three decades, result in the region’s decision-making structure and security model becoming entirely West-oriented. However, the reaction of opposing actors—particularly Iran—will be decisive in preventing security unilateralism in the region. Should Iran wish to transform from a concerned observer into an effective actor, it will inevitably need to utilize its diplomatic, security, and economic tools simultaneously—both within the framework of trilateral cooperation with Russia and China, and through strengthening bilateral strategic ties with regional countries.

The future of the Caucasus will be reflected not only in its border lines but also in the competition over the global order. In Khosroshahi’s view, if Armenia aligns itself with the United States in the new course of developments in the South Caucasus, and participates in projects such as granting the management or supervision of the Zangezur Corridor to an American company or institution, the country’s relations with two key regional players—Iran and Russia—will inevitably undergo profound and potentially costly changes. From Russia’s perspective, Armenia, despite its membership in the Collective Security Treaty Organization (CSTO) and its extensive military-economic ties with Moscow, would, by leaning toward Washington, be seen as gradually exiting Russia’s sphere of influence.

Although in recent years, particularly after the war in Ukraine, Russia has prioritized other regions in its strategic agenda, the South Caucasus remains part of its “near abroad” and a vital security space. Consequently, a clear pivot by Yerevan toward the West could trigger reactions such as the downgrading of military cooperation, suspension of economic projects, or even tacit support for Armenia’s regional rivals at specific junctures.

This Eurasia expert went on to say that alignment with the United States—especially in an extremely sensitive area like Zangezur, which directly borders northern Iran—could weaken the long-standing and strategic Tehran–Yerevan relationship. Over the past years, unlike many other regional actors, Iran has consistently sought to maintain geopolitical balance in the Caucasus and, despite serious confrontations with Baku and Ankara over certain issues, has elevated its relations with Armenia beyond certain considerations. However, if the Pashinyan government decides to firmly anchor Washington’s presence at Iran’s borders, Tehran would view this not merely as a geopolitical choice but as a direct threat to its national security.

Khosroshahi also noted that, in such a case, Iran might take steps to redefine its approach to the Caucasus and recalibrate its relations with Yerevan—options such as moving closer to Baku and increasing engagement with Russia and China within a balancing framework. It is even possible, he added, that Tehran might no longer unilaterally support Armenia’s sovereignty in the Syunik region as it has in the past, and could begin to consider certain rival transit projects from a different perspective. Overall, a clear pivot by Armenia toward the United States, while potentially providing short-term gains for the Pashinyan government, would, on a broader level, weaken the country’s strategic position in the complex balance of the Caucasus.

For Armenia’s stability and development, it is essential to maintain balance in relations with all regional actors, rather than relying solely on a single extra-regional player with specific geopolitical objectives. In response to final question regarding the potential impact of such an agreement on alternative transit routes in which Iran also participates, Khosroshahi stressed that the reopening of borders and the restoration of railway links between Armenia and Azerbaijan—especially through projects such as the “Zangezur Corridor”—if carried out under the supervision or with the support of the United States or other extra-regional actors, would not only challenge the geopolitical position of Iran and Russia in the South Caucasus, but would also entail tangible economic and geostrategic consequences for both countries in the short and long term.

According to Khosrowshahi, one of the most significant consequences of this rail connection for Iran would be the weakening of its position as an alternative transit route between Central Asia, the Caucasus, and Europe. In recent years, Iran has sought to attract part of the region’s transit capacity by developing the International North-South Transport Corridor (INSTC) and upgrading its rail and road infrastructure in the northwest and northeast regions. If a direct railway route between Baku and Yerevan becomes operational and connects via Armenian territory to European markets or the Black Sea, part of Iran’s geographical advantage will be neutralized—particularly if this route is supported and financed by Western powers and its security is guaranteed through transnational institutions or American companies.

This Caucasus affairs researcher further stated that Iran would still retain the advantage of the North-South Corridor. Politically, however, Iran will face challenges in terms of influence and engagement with the countries of the South Caucasus. Until now, one of Iran’s key tools for maintaining an active role in the region has been its transit position as well as its balanced relations with both sides of the Nagorno-Karabakh conflict. But the redefinition of rail and land routes without considering Iran’s interests could sideline the country and reduce its bargaining power in future regional arrangements. The impact of these developments, however, will be even more significant for Russia from a strategic perspective.

The South Caucasus region, and the Eurasian sphere more broadly, has always been defined in Russia’s national security doctrine as its “backyard”—an area where Russia’s military, cultural, economic, and even linguistic presence has been extensive, and which has served as part of Moscow’s instruments of influence in the international system. Khosrowshahi emphasized that the activation of new transit routes without the participation or oversight of Russia—especially if supported by Western institutions—would ring serious alarm bells in the Kremlin.

In the short term, this situation could weaken Russia’s position in the Armenia-Azerbaijan conflict and reduce its traditional role as a “security mediator.” In the long term, if Armenia becomes geopolitically inclined toward the West and parts of its regional infrastructure come under U.S. or European support, the likelihood of creating competing security-economic structures to projects such as the Eurasian Economic Union or the Collective Security Treaty Organization will increase. According to Khosrowshahi, Russia also regards the northern route of China’s Belt and Road Initiative as part of its tools of influence.

If parallel or alternative routes are formed under U.S. sponsorship, this balance will also be disrupted. Overall, should this corridor become operational without the participation or oversight of Iran and Russia, both countries will be compelled to redefine their regional priorities and strengthen their alliances and instruments in the Caucasus—whether through expanded bilateral cooperation or via third-party actors such as China. The current contest is no longer merely over transit lines; rather, it is a struggle over the redefinition of the regional security order.