The ongoing war between the U.S.-Israeli coalition and Iran has affected the neighbouring region of the South Caucasus.
Key points to take a look at:
1. 𝐃𝐞𝐥𝐢𝐜𝐚𝐭𝐞 𝐧𝐞𝐮𝐭𝐫𝐚𝐥𝐢𝐭𝐲 𝐨𝐟 𝐫𝐞𝐠𝐢𝐨𝐧𝐚𝐥 𝐚𝐜𝐭𝐨𝐫𝐬. Armenia, Azerbaijan, and Georgia have urged de-escalation without formally aligning with either side. All three countries offered condolences to Iran following the assassination of Iran’s Supreme Leader, Ayatollah Ali Khamenei. Azerbaijan condemned the March 5 Iranian drone attacks on its territory and announced full mobilization. Later, however, it reengaged with Iran, sent humanitarian aid, and held high-level talks, including a phone call between the Iranian and Azerbaijani presidents.
2. 𝐌𝐮𝐭𝐮𝐚𝐥 𝐟𝐞𝐚𝐫𝐬 𝐨𝐟 𝐬𝐩𝐢𝐥𝐥𝐨𝐯𝐞𝐫. So far, the March 5 Iranian drone attacks on Nakhchivan International Airport and nearby areas remain the only clear instance of spillover. However, concerns persist over potential border incidents, refugee flows, and ethnic tensions in northern Iran.
3. 𝐈𝐬𝐫𝐚𝐞𝐥–𝐀𝐳𝐞𝐫𝐛𝐚𝐢𝐣𝐚𝐧 𝐬𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐭𝐢𝐞𝐬 𝐞𝐧𝐝𝐮𝐫𝐞. Energy cooperation (Azerbaijan remains a major oil supplier to Israel) and defence ties continue, despite Iranian criticism and threats.
4. 𝐋𝐢𝐦𝐢𝐭𝐞𝐝 𝐢𝐦𝐩𝐚𝐜𝐭 𝐨𝐧 𝐭𝐡𝐞 𝐀𝐫𝐦𝐞𝐧𝐢𝐚–𝐀𝐳𝐞𝐫𝐛𝐚𝐢𝐣𝐚𝐧 𝐩𝐞𝐚𝐜𝐞 𝐩𝐫𝐨𝐜𝐞𝐬𝐬 𝐬𝐨 𝐟𝐚𝐫. The U.S.-brokered 2025 peace framework, including the TRIPP project, has shown resilience. The war has reinforced shared incentives for stability and reliable transit alternatives. Domestic hurdles persist, yet momentum toward normalization continues. Armenia’s foreign minister spoke with his Azerbaijani counterpart following the drone attacks in Nakhchivan, and Azerbaijan’s Ministry of Foreign Affairs thanked international partners, including Armenia, in a statement after the incident.
5. 𝐄𝐥𝐞𝐯𝐚𝐭𝐞𝐝 𝐬𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐫𝐨𝐥𝐞 𝐨𝐟 𝐭𝐡𝐞 𝐂𝐚𝐮𝐜𝐚𝐬𝐮𝐬 𝐚𝐬 𝐚𝐧 𝐞𝐧𝐞𝐫𝐠𝐲 𝐚𝐧𝐝 𝐭𝐫𝐚𝐧𝐬𝐩𝐨𝐫𝐭 𝐡𝐮𝐛. Disruptions to Iranian routes, airspace restrictions, and risks in the Persian Gulf have increased the South Caucasus’s importance as a stable East–West corridor via the Trans-Caspian route. Diverted air traffic and higher oil prices have benefited the region, strengthening its role in Eurasian supply chains.
6. 𝐄𝐜𝐨𝐧𝐨𝐦𝐢𝐜 𝐝𝐢𝐬𝐫𝐮𝐩𝐭𝐢𝐨𝐧𝐬 𝐰𝐢𝐭𝐡 𝐚𝐬𝐲𝐦𝐦𝐞𝐭𝐫𝐢𝐜 𝐞𝐟𝐟𝐞𝐜𝐭𝐬. Armenia is the most exposed, given its heavy reliance on trade transit through Iran and key imports, as its borders with Turkey and Azerbaijan remain closed. Rerouting increases costs, placing additional pressure on tourism and potential energy links. Azerbaijan faces mixed outcomes; limited transit dependence offset by oil revenue gains. Georgia experiences connectivity strains but may benefit as an alternative route. Overall, the impacts remain manageable, though escalation could worsen inflation and disrupt supply chains.
