Strategic Significance of the new Azerbaijan-Iran Railway Project: Shaping South Caucasus Geopolitics

Azerbaijan-Iran-Armenia borders
Map of Azerbaijan-Iran-Armenia border (Credits: Orijentolog, CC BY-SA 3.0, via Wikimedia Commons)

Persian Files ISSN 2975-0598 Volume 17 Issue 1
Author: Silvia Boltuc

Azerbaijan-Iran recent bilateral agreement to initiate a collaborative rail project signifies a pivotal development in the geopolitical landscape of the South Caucasus. This strategic infrastructure venture holds the potential to bring about a measure of stability to the region.

By circumventing the contentious Syunik region in Armenia, where Baku has expressed intentions to exploit the Zangezur Corridor, this joint rail project not only addresses critical economic interests but also serves as a tangible manifestation of political intent.

The diversion of transit away from the Syunik region alleviates a major point of tension, potentially mitigating friction and fostering a more conducive environment for diplomatic engagement. Consequently, this accord stands as a noteworthy milestone in reshaping regional dynamics, warranting keen observation and careful consideration in the broader context of South Caucasus affairs.

Azerbaijan-Iran Bilateral Agreement: Background Information

On October 6th, 2023, Azerbaijan’s Deputy Prime Minister, Shahin Mustafayev, engaged in a significant meeting with Iran’s Roads and Urban Development Minister, Mehrdad Bazrpash. The discourse between Mustafayev and Bazrpash centred on pressing matters within the bilateral framework, specifically pertaining to transport and communications, as well as the utilisation of energy and water resources shared between Azerbaijan and Iran, as conveyed by the Azerbaijani government.

During the meeting, both parties issued directives to their respective agencies, emphasising the expeditious completion of the Astara cargo terminal construction project. They underscored that this terminal holds strategic importance in facilitating regional trade and connectivity.

Moreover, the participants of the meeting underlined the paramount significance of hastening the progress of ongoing projects involving the construction of hydroelectric power plants, such as Khudaferin, Giz Galasi, and the Ordubad-Marazad. These projects help to enhance energy production and resource management in the region.

The formalisation of the meeting’s outcome was achieved by signing several essential documents. Among them was a letter of intent, signifying a commitment to the construction of a new railway line and rail bridges, which will establish a vital link between the East Zangezur economic area and Azerbaijan’s Nakhchivan Autonomous Republic, traversing Iranian territory. This development holds considerable promise for bolstering economic cooperation and trade between the involved regions.

Furthermore, the meeting led to an agreement reached by the co-chairs of the joint working group responsible for the construction of an automobile bridge on the border and a pedestrian passage across the Aras River at the Azerbaijani-Iranian border crossing points of Agbend in Azerbaijan and Kelale in Iran. These infrastructure projects are expected to facilitate smoother cross-border movement, fostering greater connectivity and cooperation between the two nations.

Azerbaijan-Iran New Joint Rail Project

In a strategic move, the governments of Azerbaijan and Iran have announced their intention to embark on a new joint project, which carries the potential to reshape the geopolitical dynamics in the Southern Caucasus. This initiative holds the promise of not only strengthening economic ties but also exerting a potential influence on the geopolitical balance in the region.

It builds upon their past collaboration, particularly their successful shared rail project, which has already enhanced trade and connectivity between the two nations. The partnership between Baku and Tehran, in fact, has seen a notable 44% increase in the exchange of goods through their joint railway at the Astara border crossing during the first half of the current Iranian calendar year, spanning from March 21 to September 22.

The joint rail project’s success is further highlighted by the fact that over 98,000 tons of goods were exported from the Astara rail terminal in the first half of the current Persian calendar year. Additionally, approximately 128,000 tons of non-oil goods have been efficiently transited through this border point, showcasing the pivotal role played by the railway connection in facilitating bilateral trade.

The new project linking the East Zangezur economic area and Azerbaijan’s Nakhchivan Autonomous Republic signifies their commitment to deepening economic integration and regional cooperation. This development merits close observation as it unfolds, as it may have broader implications for the region’s dynamics and strategic alliances.

Baku’s recent reclamation of control over the Nagorno-Karabakh region, achieved through a swift 24-hour military operation, led to a mass exodus of most of the territory’s 120,000 ethnic Armenians to Armenia. This development has brought to the forefront several complex geopolitical issues in the South Caucasus region.

Azerbaijani President Ilham Aliyev emphasised that allegedly eight Azerbaijani villages would be still under ‘Armenian occupation’, underscoring the significance of liberating these areas. This assertion raises questions about Azerbaijan’s territorial claims, particularly over Armenian territories that Baku considers historically Azerbaijani lands and casts a shadow over the delicate geopolitical landscape in the region. Furthermore, President Aliyev’s criticism of the European Union and his warning regarding France’s decision to provide military aid to Armenia highlight the potential for renewed conflict in the South Caucasus.

The joint project between Baku and Tehran holds broader implications, extending beyond economic advantages and regional connectivity. It signifies Iran’s strategic efforts to safeguard its border with Armenia and prevent Azerbaijan from gaining control of the Syunik region through military means. In this context, the rail connection between the two nations not only fosters economic cooperation but also carries geopolitical significance by influencing the power dynamics and territorial considerations in the South Caucasus.

Azerbaijan and Iran have reached an agreement pertaining to the construction of a railway bridge alongside a road bridge. Thie construction activities for the Aghband Road Bridge spanning the Aras River officially started on October 7th, 2023. Border and customs infrastructure near the Aghband settlement within the Zangilan district will be established.

Functioning as a vital transit route, the Aras Corridor will evolve into the Azerbaijan-Iran-Nakhchivan Corridor, facilitating connectivity between the East Zangezur Region in Azerbaijan and the Nakhchivan Autonomous Republic via Iranian territory. The corridor spans from Aghband to Jolfa and encompasses a bridge measuring 220 meters in length and approximately 25 meters in width. The project is slated for completion and operational readiness within a year.

Upon the bridge’s completion, the border checkpoint is expected to accommodate a daily influx of approximately 1,100 vehicles. This development heralds a significant advancement in regional connectivity and economic integration.


The Foreign Minister of Iran has emphasised the need for a fresh start in regional cooperation to promote peace and economic development in the Caucasus, following the Republic of Azerbaijan’s recent reclamation of the Nagorno-Karabakh region. During a meeting in Tehran with the special representative of the Republic of Azerbaijan’s president, Iranian Foreign Minister Hossein Amirabdollahian expressed Tehran’s unwavering commitment to expanding its relations with Baku across various domains. He underscored the importance of establishing a balanced approach to bilateral relations, envisioning a new era of interaction. Amirabdollahian also emphasised the necessity of shifting from a language of tension and conflict to one of peace and security in the Nagorno-Karabakh region.

Iranian President Ebrahim Raisi, reiterating Iran’s steadfast stance against any geopolitical alterations in the region, conveyed Tehran’s willingness to actively contribute to the promotion of peace, stability, and resolving disputes within the Caucasus.

There is now considerable speculation regarding Azerbaijan’s potential use of force to establish a corridor linking the Azerbaijani exclave of Nakhchivan with mainland Azerbaijan, passing through the southern Armenian province of Syunik. Armenia has expressed opposition to this plan, as Azerbaijan seeks control over it despite its passage through Armenian sovereign territory. Iran has lent support to Armenia’s position, emphasising the importance of upholding the territorial integrity of nations.

Iran’s strategic moves in the South Caucasus have demonstrated its commitment to safeguarding Armenian sovereign territory, focusing particularly on the Southern Syunik region. In October 2022, Iran established a consulate in Kapan, a development viewed as a clear signal to Azerbaijan regarding the potential threat of gaining control of  Syunik through the use of force.

This proactive stance by Tehran was further underscored when it invited Yerevan to establish an Armenian consulate in the Northern Iranian region known as ‘East Azerbaijan’, predominantly inhabited by Turkish-speaking communities. This move not only highlighted Iran’s intentions to support Armenia but also signalled a nuanced approach to regional diplomacy. On the other side of this complex equation, Azerbaijan’s desire to establish a corridor connecting the Turkish bloc from Central Asia to Europe via Turkey (Zangezur Corridor) remains pivotal, a strategic aim that aligns with the interests of NATO countries and underscores the multifaceted geopolitical dynamics in the region.

The newly established rail connection between Azerbaijan and Iran assumes a position of profound strategic significance for several compelling reasons. Economically, it promises substantial benefits for both Tehran and Baku. Iran stands to gain by linking Azerbaijan to Turkey and Europe, thereby facilitating increased trade and investments in Iran. Meanwhile, Azerbaijan’s access to this vital rail route reduces its need to assert control over the Syunik region, a concern that aligns with international efforts aimed at safeguarding Armenia.

For Iran, the border with Armenia holds immense importance, serving as a critical link to northern Eurasian regions and enabling trade within the framework of its agreement with the Eurasian Economic Union (EAEU). This railway connection further augments the volume of trade between Baku and Tehran, fostering economic cooperation.

With implementing this common infrastructure, Iran is poised to become an indispensable component of a regional network that spans from Central Asia to Europe. Concurrently, Turkey’s endeavours to marginalise Tehran, driven by its recognition of Iran’s strategic location as a potential transit and energy hub, have led to Ankara’s concerted efforts to establish itself in this pivotal role.

By contributing to the establishment of peace and stability in the region, Iran not only secures its own interests but also plays a critical role in shaping the evolving geopolitical landscape of the South Caucasus.

Lastly, the joint railway project will form an integral component of the infrastructure network within the International North-South Transport Corridor (INSTC), connecting Russia and Iran through Azerbaijan.

This endeavour is poised to reinforce the Russia-Azerbaijan relationship that emerged in the aftermath of the recent Nagorno-Karabakh crisis, and this strengthening is expected to be even more pronounced in the wake of the Ukrainian crisis, which forced Moscow to pursue alternative routes.

On the other side, despite previous points of contention with Azerbaijan, particularly relating to ideological and secessionist matters, the expansion of joint projects between Baku and Tehran holds the potential to contribute to the stabilisation of diplomatic relations and help prevent diplomatic or military crises.

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