The conflict in Iran has rapidly expanded from a local dispute to a broader regional war involving multiple Middle Eastern countries. Following the targeted U.S.-Israeli attack that killed Iranian leader Ali Khamenei, Iran has retaliated by launching missiles and drones at neighboring countries, particularly the Arab Gulf states like Qatar, the U.A.E., Saudi Arabia, and Bahrain. Despite assurances from U.S. President Donald Trump that the conflict is nearing an end, the situation remains unresolved.
While the South Caucasus region, including Armenia and Azerbaijan, has largely remained uninvolved in the conflict, there are indications that this may change in the future. Both Armenia and Azerbaijan share a history of conflict, with the recent 2023 reconquest of Nagorno-Karabakh by Azerbaijan leading to a significant refugee crisis in Armenia.
Although a temporary calm has been established between Armenia and Azerbaijan through a recent peace agreement facilitated by Trump, the ongoing war in Iran poses a threat to this fragile peace. There are concerns about potential disruptions to Armenia’s gas-swap deal with Iran and its trade routes with the Gulf states and China. Additionally, Armenia could see an influx of Iranian refugees, including ethnic Armenians, fleeing the conflict.
Azerbaijan’s relationship with Iran is complex, as Azerbaijan maintains close ties with Israel, which Iran views as a threat. Speculation suggests that Azerbaijan may be used by Israel for intelligence operations against Iran, leading to tensions in the region. Furthermore, Azerbaijan must navigate its relationships with both Turkey and Israel, as Turkey pressures Azerbaijan to stay out of the conflict.
The potential escalation of the conflict poses risks to Azerbaijan’s critical oil and gas fields, which are vital for its economy. The targeting of Western-linked assets by Iran could further destabilize the region. Any instability in Iran could also reignite the Armenia-Azerbaijan conflict, as Iran serves as a counterbalance to Turkey’s influence in the South Caucasus.
Despite the uncertainties, many Iranian refugees like Reza have sought refuge in Armenia, citing political persecution and economic hardships in Iran. The future remains uncertain for these individuals, as they grapple with the prospect of returning to a politically unstable Iran.