One year after the end of the Second Karabakh War, the landscape in the South Caucasus has changed: both politically and physically. Against all expectations, the leadership in Baku is moving with great speed to develop the de-occupied territories. Highways have been constructed linking them with the eastern part of the country. One international airport has already opened, and two more are under construction.

The formerly occupied regions are becoming a generator of economic growth for Azerbaijan. Following the state’s re-establishment of the integrity of most of its territory, the possibility is opened up—for the first time in nearly two generations—that peace and prosperity may come to the whole South Caucasus through regional cooperation.  Such a development is, however, still far from a sure thing.  

In a nutshell: Iran has every reason to seek to turn Armenia into a failed state, like Lebanon, in order to push its own interests in South Caucasus. This would be a disastrous development for Armenians in Armenia, for the whole of the South Caucasus, indeed also for Turkey and even for Russia. A relatively stable Armenia—even one with a truly democratic civil society—would be more in Russia’s interest than an unstable Armenia with increased influence from Iran’s terrorist and terrorist-sponsoring Islamic Revolutionary Guard Corps.

Iran is playing the “Armenia card” against Turkey, but this ends up being also against Russia and is not in Russia’s national interest. It is why the Tsar fought five wars against Persia in the early nineteenth century! A relatively stable and, at least, not-impoverished Armenia under Russian influence is more to Moscow’s advantage than an unstable Armenia under increased IRGC influence.

One might say that a struggle has thus started for the soul of Armenia, and that its result will have implications for the entire south Caucasus and beyond. The victory of Prime Minister Nikol Pashinyan in Yerevan in the snap parliamentary elections in June this year was extraordinary, insofar as he had been head of the government during the Second Karabakh War, which was for Armenia a catastrophic loss.

It is a time of great opportunity and great danger. Armenia has the opportunity to leave behind the failed policies of the “Karabakh clan” that impoverished the country for two decades. It needs investment, and for that, it needs a formal peace treaty. Armenia can still be saved from becoming a failed state, but forces are working against it. 

These forces are not from Azerbaijan, because a prosperous, truly democratic Armenia can only contribute to international security in the whole South Caucasus, including Azerbaijan. Indeed, the only country that may have the financial means to invest in Armenia for peaceful purposes would seem to be Azerbaijan. This is why a peace treaty finally settling the Karabakh Wars, including the mutual delimitation of international borders and recognition of territorial integrity, is imperative the soonest possible.

The bellicose, destabilizing forces come from Iran and the Armenian diaspora, the most vocal and militant parts of which are working with Iran to provoke a new and catastrophic war. The “war party” in Yerevan has been recruiting and even finding new external allies, beyond its long reliance on the Armenian diaspora for international publicity and financial support. In particular, Iran has moved from covert support of Armenia to overt support of Armenia.

Let me explain this with an over-simplification from the standpoint of the regional power balance, in which there is nevertheless an important kernel of truth. If we would suppose (1) that Russia has more than half-succeeded in drawing Georgia back into its own sphere of influence under Bidzina Ivanishvili’s political hegemony in Tbilisi, and (2) that Azerbaijan’s victory in the Second Karabakh War represents an insertion of Turkish influence into the South Caucasus, then we would could say (3) that Iran is now trying harder than ever to assert itself overtly in the South caucuses through the instrument of Armenian military-industrial complex.

Executives of Iranian military companies have increased their visits to Armenia. Diplomatic communications have intensified. In January, an Iranian Export and Investment Centre was established in Yerevan. Attendees at the opening ceremony included representatives from such Iranian laser- and communications-system and drone manufacturers as Rayan Roshd, Eskay Rayter, Radin, and Azer Partu Spadana.

It makes sense that Iran, which is perpetually more or less hostile to Azerbaijan, finds common cause with the maximalist Armenian diaspora, which by all appearances wishes to prepare a Third Karabakh War against Azerbaijan. The more Armenian diaspora is more than actively involved in the lobbying for Iranian interests, and not only in Yerevan.

The Armenian diaspora has been one of the strongest elements of the “war party” in Yerevan over the past three decades and, living abroad, it does not have to suffer the effects of the disastrous policies that it advocates. The former chief advisor to Armenia’s president Levon Ter-Petrosyan in the 1990s, Jirair Libaridian has warned about how the Armenian diaspora’s mythomania and territorial claims about “Greater Armenia” may lead to the demise of Armenia as it exists today.

The Armenian economy has collapsed. The population outside Yerevan is migrating out of the country. The Armenian diaspora could assist greatly with foreign direct investment into Armenia for real economic and social prosperity, but they do not do this. Rather, they see their own narrow interest in grandstanding from a distance, without caring about Armenian lives in Armenia; and so they assist Iran: against the interests of Russia, the interests of Turkey, and indeed the interests of the European Union which seeks only a stable and prosperous neighborhood in the South Caucasus.