Iran In the Caucasus, Should Israel Worry?

In recent weeks, persistent and perturbing reports have appeared in several prominent media outlets — with potentially ominous overtones for Israel — of a sizeable weapons deal brewing between Armenia and Iran.

Although there have been spluttering peace negotiations between Azerbaijan and Armenia, raising hope of some resolution to the decades-long conflict between the two Caucasian nations, tensions still exist.

Armenia’s Soaring Defense Budget

Indeed, there are signs that Yerevan, still stung by military defeats in 2020 and 2023, (when Baku re-took over the entire then-Armenian-controlled enclave in Nagarro Karabagh), is bent on enhancing its military prowess.

Significantly, Armenia’s Finance Ministry reported that defense spending in 2024 rose by 81% compared to 2020.to about $1.4 billion.

It’s against this backdrop that the reported Armenia-Iran deal should be apprised.

The deal, estimated at $500 million — more than 1/3 of the entire 2024 budget — reportedly includes not only armaments like drones and air-defense missiles but also intelligence cooperation, joint training, and the establishment of bases on Armenian soil

Some observers point out that it is unclear just how Armenia can afford such a significant purchase, although it is perhaps conceivable that it could be financed by loans.

However, there is another possible avenue of quid-pro-quo which could be a source of considerable concern for Baku.

Indeed, Iran may see the benefits of the deal as non-monetary — i.e. in terms of physical presence on Armenia soil and intelligence cooperation

Compelling Rationale

Thus, there is compelling rationale for both Tehran and Yerevan in forging the deal.

On one hand, as one U.S. scholar of Iran suggests, it could allow Iran to enhance its relevance in the Caucasus.

Indeed, the Islamic Republic perhaps views the deal as a way for it to fill a void left by Russia after its failure to support Armenia during last year’s military clash against Azerbaijan,

On the other, according to a security expert from the Royal Military College of Canada, Armenia possibly perceives it as a “necessity” to defend itself against Azerbaijan.

As I have pointed out recently, Amenia functions as a hub for the flow of goods and armaments between Russia and Tehran and a conduit for circumventing Western sanctions on Moscow, imposed following its assault on Ukraine.

However, as mentioned, relations with Russia have soured significantly following Armenian disillusionment when Russia failed to come to its aid.

In this regard, one source ventured that it could also be a means for Russia to continue to acquire to arms through Armenia.

Indeed, he raises the possibility that “It could be a way in which Armenia can still endear itself to Russia by being the go-between Iran and Russia, especially in the provision of drones …in such a way that it will be difficult for Western powers…to pressure Armenia.”

Too much “Smoke” to Discount or Ignore “Fire”?

For Azerbaijan, one point of potentially grave concern is that the Iranian drones, which lately have been employed with lethal effect by Russia against Ukraine, may now become a significant part of Armenia’s arsenal in any future military conflict between the two countries.

Both Yerevan and Tehran denied the reports of a coalescing arms deal.

However, there might be just too much “smoke” to make denials of a “fire” credible.

Indeed, there is much to stoke animosity between the two parties.

Much like Israel, Azerbaijan fears Iran as a grave threat to it, particularly Tehran’s potential influence over its majority Shi’ite population, while Tehran fears Azerbaijan’s potential influence on the large ethnic Azeri population in Iran

Thus, if confirmed, the report of an Iran-Armenia arms deal entails considerable potential to rattle Azerbaijani authorities.

Indeed. a sobering indication of how the Iranians view their relationship with Armenia is provided by their choice of their ambassador to Yerevan, Mehdi Sobhani, formerly Iran’s envoy to Syria.

Sobhani was responsible for coordination/cooperation between the Iranian-backed armed forces and the Syrian government and is reportedly a member of the Islamic Revolutionary Guard Corps, designated as a terror organization by the U.S. in 2019.

A brewing Kafkaesque scenario?

Although the web of disparate interests involved makes it difficult to discern fact from fiction regarding the alleged arms sale, Iranian intrigue in the Caucasus could create a potentially Kafkaesque situation.

On July 22, the Council of the European Union via the European Peace Facility (EPF), established in 2021 with the noble goal of preventing conflicts, preserving peace, and strengthening international security and stability, approved 10 million Euros in aid for the Armenian military.

However, Ukraine is also a recipient of EPF funds.

Ironically Armenia, which has long been a conduit for arms to Russia and if the arms deal with Tehran is consummated, this flow could be increased.

This could create an absurd situation, where the EU is, in fact, helping facilitate the flow of arms to be used against Ukraine by Russia in total opposition to its goal of aiding Ukraine.

The Israeli Aspect

For Israel, the agreement may have menacing — albeit tangential — ramifications.

After all, if it has beneficial payoffs for its mortal foe, Iran, whether in terms of improved intelligence or physical deployment, or in terms of enhancing its strategic prowess over Israel’s strategic ally, Azerbaijan, it will certainly be a harbinger of ominous developments.

Martin Sherman spent seven years in operational capacities in the Israeli defense establishment. He is the founder of the Israel Institute for Strategic Studies (IISS), a member of the Habithonistim-Israel Defense & Security Forum (IDSF) research team, and a participant in the Israel Victory Project. Read Martin Sherman’s Reports — More Here.