One of the banes of the Central Asia & Caucasus region is that they have Iran’s hard-line regime as their neighbor. The clerical regime often fights with them over resources, uses their territories to wage spy wars, and exacerbates regional tensions through its generally aggressive policies. From the perspective of Iran’s economic and diplomatic interests, these policies are self-defeating. But intimidating its neighbors through threats and other confrontational tactics lie at the heart of Iran’s regional security policy, and are unlikely to end without a change in its regime.

BACKGROUND: Iran’s neighbors have suffered from Iranian threats since they gained independence from the Soviet Union, whose colossal presence temporarily ended the historical struggle between Russia, Iran, and Turkey for dominance of the CACI region.

Iran and its Caspian neighbors have a longstanding dispute over Tehran’s expansive claims over offshore energy resources. Iran continues to differ with Russia and the other littoral countries (Azerbaijan, Kazakhstan, and Turkmenistan) regarding how to divide and manage the Caspian and its valuable sub-surface natural resources. These legal disputes have prevented exploitation of the Caspian Basin’s energy resources. Iranian and Russian officials have colluded to impede the construction of Trans-Caspian oil and gas pipelines linking Kazakhstan to Azerbaijan without transiting Iranian or Russian territory. Besides the absence of an agreed legal framework to govern underwater mining and shipments, the two governments have cited alleged environmental concerns to hinder the Caspian states from expanding energy ties with European countries. In July 2001, an Iranian gunboat drove two Azerbaijani research ships from a disputed oil field in the south Caspian. 

Except for some linguistic ties with Tajikistan and religious connections with the Shiites of Azerbaijan, Iranian assertions of deep ties with Central Asians and South Caucasus nations have had little traction among regional elites fearful of Iran’s use of people-to-people exchanges for purposes of religious proselytizing and subversion. Iran’s CACI neighbors are individually weak and collectively divided, requiring them to rely on external great powers for their protection.

Proximity and visa-free travel between Iran and these countries have facilitated cross-border spying and subversion. Iranians have claimed that Mossad and CIA agents organize plots against Iran’s nuclear program from CACI territories as well as collect sensitive intelligence information about Iran. Yet, recent weeks have seen Iranian assassination attempts against Israeli diplomats in Baku and Tbilisi and the exposing of Iranian-linked intelligence and assassination teams in the CACI region.

IMPLICATIONS: Azerbaijan has been the main target of Iranian threats, which have included verbal abuse, cyber attacks on government web sites, and Iranian special operations on Azerbaijani soil. Iran’s preoccupation partly results from ethnic vulnerabilities. Perhaps a fifth of Iran’s population consists of ethnic Azeris. Given how their rights are repressed under the clerical regime, these 20-30 million Azeris might want to join with “Northern Azerbaijan” rather than remain as Iran’s largest ethnic minority, with restricted autonomy. In addition, Azerbaijani oil and gas provide a substitute for Iranian energy exports, weakening Tehran’s leverage with Europe. Azerbaijan has also sided with Turkey against Syria, Iran’s closest regional ally, and offered to let Russia and the U.S. establish a joint monitoring station to keep tabs on Iranian missile launches.

Georgia has found itself caught between maintaining good ties with Iran, at least to avoid its collaborating with Russia against Tbilisi, and the U.S., a close partner but not a formal ally. But Iran makes it hard to keep this neutral stance. In February, Iranian agents tried to assassinate an Israeli Embassy employee in Tbilisi. Georgia and Iran introduced a visa-free travel regime in 2010. Although the tens of thousands of Iranian tourists have boosted the Georgian economy, Iranian agents can now more easily enter Georgia thanks to the visa waivers.

Even Yerevan is cross-pressured. Armenians naturally fear that a war involving Iran, or severe sanctions, would disrupt their extensive economic ties with Iran, especially important in the realm of energy, as well as Armenian use of Iranian territory to reach world markets. Since Armenia’s borders with Azerbaijan and Turkey are closed, Armenians need to transit goods through Iran or Georgia, a country also vulnerable to a war with Iran. At the same time, Armenians benefit from tensions between Iran and Azerbaijan, their main external threat due to the contested status of Nagorno-Karabakh. Armenia generally supports Iran in international fora and sees Iranian military power, along with that of Russia, as a means of neutralizing Azerbaijan’s military buildup.

A primary Iranian objective in Central Asia and the Caucasus has been to keep their governments from aligning with U.S efforts to isolate Tehran or pressure Tehran to change its policies. Ideally, Iran wants these governments to curtail the access that U.S. military forces have enjoyed to Central Asian territory and facilities since the September 2001 terrorist attacks against the U.S. Operation Enduring Freedom has resulted in large U.S. military contingents operating in Afghanistan and neighboring countries, supplementing the traditional powerful U.S. military presence in the Persian Gulf. At a minimum, Iranian officials want to constrain the U.S. military’s access to territory, airspace, or military facilities in Central Asia that could be used to attack Iran.

Iran plays on the Central Asian and South Caucasus states’ fear of the regional repercussions of a war involving Iran. The fighting could generate massive flows of refugees and displaced people, scare off foreign investors, and disrupt regional transportation, communication, and other infrastructure networks. The CACI region is still recovering from the negative economic and human effects of earlier conflicts, especially those between Azerbaijan and Armenia, and between Russia and Georgia. The Central Asian and South Caucasus governments also oppose applying additional U.N. sanctions on Tehran given their economic ties with Iran.

But Iran’s policies of threats and provocations are counterproductive. For example, the Central Asian and Caucasus members of the Shanghai Cooperation Organization (SCO) have repeatedly rejected Iran’s application to become a full member of that organization. Iranian officials have lobbied for full membership since obtaining formal SCO observer status at the July 2005 leadership summit. On several occasions, Iranian President Mahmoud Ahmadinejad has attended the annual leadership summits and offered to contribute Iranian oil and gas to an SCO energy club. The other SCO members remain wary of Tehran’s alleged ties with regional terrorist groups and the Iranian government’s confrontational policies towards the West. They fear that the accession of such a controversial country would discredit the SCO, already seen by some as a dictators club.

If it were not for the Iranian government’s self-induced political alienation, its territory would have long served as a natural transit route between Central Asian countries and the world’s oceans. Iranian territory could serve as a gateway for landlocked Central Asian countries to access the energy resources and rich commercial markets of the Persian Gulf and beyond. With improved relations, Russia and India could have begun building their International North-South Corridor a decade ago. This multi-modal transportation network, as agreed back in September 2000, would link India's west coast ports to Bandar Abbas in Iran, then overland to Iran’s Caspian Sea ports and on to Azerbaijan, Kazakhstan, and Russia. The resulting reduction in the costs and time of transporting cargo would have made many Iranian exports more competitive.

CONCLUSION: Tehran’s policies in its neighborhood are economically and diplomatically costly, but the Iranian regime is willing to incur these costs since they lie at the heart of Iran’s non-nuclear deterrent policy. Iranian threats discourage CACI states from cooperating with the U.S. and its allies against Tehran. And until Iran acquires nuclear weapons, Tehran lacks a direct deterrent against an Israeli or U.S. attack. Instead, Iran must rely on indirect deterrence by threatening nearby U.S. allies and partners, including those in Central Asia and the South Caucasus. Holding them hostage reminds Washington that Tehran would likely lash out at them in anger for any U.S. strike, while simultaneously encouraging them to lobby the Pentagon not to strike.

AUTHOR’S BIO: Dr. Richard Weitz is a Senior Fellow and Associate Director of the Center for Future Security Strategies at the Hudson Institute.