BACKGROUND: It is unlikely that the Azerbaijani regime has any illusions about the threat that a nuclear Iran could pose to it and the region. Nonetheless its decision reflects the current geopolitical balance in and around the Caspian with regard to Iranian nuclearization. For some time now there have been signs that Azerbaijan was concerned that any aggravation of the crisis around Iran, e.g. by sanctions, could rebound in negative fashion upon it. Observers note that Azerbaijan sees Iran as a possible substitute for Russian energy imports now that Moscow has decided to use energy pressures against it. Indeed, recent Irano-Azerbaijani gas deals make Iran an important supplier of natural gas to Azerbaijan and its detached province of Nakhichevan. Antagonizing both Moscow and Tehran at the same time would therefore be a very rash act for Baku. Similarly, the Azerbaijani public opinion clearly opposes any idea of U.S. military action against Iran, making it difficult for the government to show support for such actions, even if only by endorsing sanctions. But beyond these important restraints upon it, there are other equally pressing considerations that have led Azerbaijan to reject any decisive course of action against Iran. There is little doubt that Washington has sought expanded military access to the Caspian region although it is not clear that it seeks such access primarily against Iran, or that, if it got such a base, that any state would allow it to be used for such purposes. Moreover, the U.S. government appears to have renounced the idea of permanent bases in the former Soviet Union. But even if a CIS regime contemplated giving America a base on its territory, the hailstorm of opposition and pressure that would immediately descend upon it from Moscow, not to mention Tehran, would be enormous. Obviously, Baku is unwilling to run such risks of antagonizing its most important neighbors for America’s sake. While Baku is more than ready to take American aid to improve its own capabilities for self-defense and protection of the Caspian littoral; it well knows that in doing so it runs up against Moscow’s determination to make the Caspian a closed lake and Iran’s stubborn opposition to any non-littoral state’s military presence there. And these two states’ reaction is not something that Azerbaijan is eager to test. Indeed, in May 2005, right after Secretary of Defense Donald Rumsfeld left Baku on a visit widely reported to be connected with placing U.S. bases in Azerbaijan, Baku signed a non-aggression pact with Iran barring third countries from establishing bases in their countries to strike at the other side, making its opposition to a military strike from its country quite clear. So, like Azerbaijan and Kazakhstan for example, they confine themselves to anodyne or neutral statements confirming Iran’s rights under the Non-Proliferation Treaty but clearly hoping that it does not go nuclear and threaten them. And energy cutoffs comprise only part of what Iran and Russia could do to it in retaliation for allowing America a base there. Iran comprises three potential threats to its Caspian neighbors: conventional (and potentially nuclear) military threats, support for insurgents, radicals and terrorists throughout the Caucasus and Central Asia, and the use of energy, both in terms of selling or buying energy from its Caspian neighbors. And Iran has integrated these instruments of power into a visible strategy with regard to the CIS governments. Although most assessments of Iranian military policy and capabilities naturally focus on the Gulf and the Middle East; the Caspian dimension of these capabilities should not be neglected. Iranian officials have made it clear that they want Washington to regard it as a “big regional power” and this vision clearly spans the Caspian littoral. Similarly, in the past, high-ranking Iranian officials have publicly stated that it stood ready to respond militarily to Western interference in Caspian affairs. And Iran’s conventional arsenal makes it far stronger than an other littoral state except Russia. Iran is clearly enhancing its capabilities for asymmetric power projection in both the Persian Gulf and to a lesser degree the Caspian. Not only has it brandished this arsenal in the past, Iran has also committed itself to a buildup of its Caspian commercial fleet to enhance its commercial presence in the Caspian Sea. IMPLICATIONS: Obviously, none of Iran’s Caspian neighbors even remotely approximates its capabilities and that fact alone might serve to deter them from hosting U.S. bases on their territory for use against Iran. But if those capabilities did not suffice to deter them, then the possibility of Iranian-backed insurgency or terror operations in Central Asia and the Caucasus, such as those alluded to above would not be difficult for Iran to coordinate given its ties to international terrorists like Hezbollah, Hamas, Islamic Jihad, and even Al-Qaeda. Certainly there have been persistent reports of Iranian underground activities, particularly in Tajikistan and Azerbaijan. But beyond that, there is considerable evidence that Iran is building up networks or relationships among South Caucasian, Central Asian and Afghan insurgents and terrorists that could be activated in the future to threaten those governments or American interests or bases there. At the same time, it also is clear that Iran’s actual attitude toward the groups it sponsors is wholly instrumental. Although they are maintained and kept on hand for when they may be needed, they are not activated until and unless Iran’s relationship with one of the neighboring states, either in the Middle East or in the former Soviet Union deteriorates. Moreover, the closer a country is to Iran’s borders, the less likely is Iran to let its hand be seen in fomenting insurgency, particularly if Russia is on the other side of that country’s borders. Thus if covert or overt support for such groups jeopardizes critical security relationships like that of Tehran with Moscow, then those groups are shelved as happened in Tajikistan. Thus Iran need not activate either its conventional or unconventional capabilities in order to secure tangible benefits in its diplomacy and defense policy. These capabilities are always on view, so to speak, or in the room with Iranian officials when they try to persuade Iran’s neighbors not to join with America. Iran has combined threats with offers of support. On the one hand, it is widely believed that high-ranking Iranian officials have communicated that they could hurt Azerbaijan if they chose to do so, yet on the other hand, they are offering inducements such as energy deals and even offers of help in building an indigenous defense industry, it is clear that the prospect of a crisis involving Iran is one that alarms Azerbaijan and all the Caspian littoral states. Their desire for a negotiated solution without threats and crises is therefore quite genuine. And Azerbaijan’s stance perfectly comports with this overall regional strategic perspective. CONCLUSIONS: Baku’s reluctance to act decisively here, however understandable, greatly hobbles any possibility of real pressure upon Tehran. It shows just how difficult it is to get regional actors to act against what they clearly know is a security threat even as it grows before their eyes. And this reluctance to act further diminishes the likelihood that effective implementation and upholding of the Non-Proliferation Treaty can be sustained under present circumstances. This outcome is clearly linked to the deteriorating situation in Iraq, but it also a result of Russia\'s rising capabilities. Washington has evidently staked its policy towards Iran on the belief that Russia can somehow be persuaded to support it against Iran’s nuclear ambitions. But it is clear that Moscow can and does play an evasive game while its smaller neighbors, who must live in the shadow of its power, frustrate both the cause of non-proliferation and the expansion of Western influence in and around the Middle East and the CIS. Meanwhile Iran threatens and smiles at the same time. Under these circumstances – what real option is left for Baku? AUTHOR’S BIO: Professor Stephen Blank, Strategic Studies Institute, US Army War College, Carlisle Barracks, Pa. 17013. The views expressed here do not represent those of the U.S. Army, Defense Department, or the U.S. Government.