Azerbaijan and Iran laid the foundation on October 6 for a transit route connecting western Azerbaijan to its exclave of Nakhchivan through Iran. The road bridge is being built in line with the memorandum of mutual understanding between the governments of Azerbaijan and Iran on developing new transport links. According to the Azerbaijani media, the bridge will span the Aras River to connect to the Iranian province of Eastern Azerbaijan.

The new transit project announcement came amid the ongoing normalisation of ties between Azerbaijan and Iran after months of harsh diplomatic confrontation. From the Iranian perspective, there are several reasons behind the shift in diplomatic relations, but the most important is the changed regional balance of power in the South Caucasus following the war in 2020 between Azerbaijan and Armenia. Among the broader impacts of the war were the declining influence of Iran and the strengthening axis of Baku-Ankara and Baku-Tel Aviv in the region.

The turning point was the Azerbaijani government's ambitious plans to establish a land route with Turkey from Nakhchivan through Armenia's Syunik province shortly after the Russia-brokered ceasefire agreement was signed between Baku and Yerevan in November 2020. Given the bilateral strategic partnership between the two countries, Azerbaijan has long sought to be linked directly to Turkey via a land route. However, such plans provoked an immediate reaction from Iran, the strategic partner of Armenia, accusing Azerbaijan and Turkey of attempting to redraw the borders in the South Caucasus.

The proposed corridor project comprises transit networks, such as highways, bridges, tunnels and railway connections. The initial route was supposed to run through Armenia's Syunik province, which triggered fears in Yerevan about Azerbaijan's possible "invasion of Syunik" and became the main point of discontent during the peace talks with Armenia in the last two years. Armenia saw such plans as part of the rising ambitions of Azerbaijan following its military victory in the 2020 war as well as Turkey’s ongoing geopolitical expansion.

Although Azerbaijan rejected all allegations regarding a possible takeover of Syunik for implementing the Zangezur Corridor, and recognised Armenia’s sovereignty over these territories, this did not reassure Armenia. Yerevan is closely aligned with Tehran as one of the potent deterrent forces against Azerbaijan.

However, the steady diplomatic reconciliation between Azerbaijan and Iran generated a renewed approach to the Zangezur Corridor project. Iran made the first step by sending Foreign Minister Hossain Amir Abdollahian to Baku to attend the ministerial meeting of the Non-Alignment Movement, where he held a face-to-face meeting with President Ilham Aliyev. During the visit, Abdollahian expressed Iran’s interest to be a part of the land corridor project between Azerbaijan-Nakhchivan-Turkey.

Although the minister's statement did not cause an immediate reaction from Baku, later, the idea seemed acceptable as President Aliyev's aide, Hikmat Hajiyev, stressed that there was an alternative route for the Zangezur Corridor if Armenia refused to participate. In line with this statement, the Turkish Minister of Transport Abdulkadir Uraloglu also pointed to Iran as a potential transit country within the Zangezur Corridor.

As such, by laying the foundation of a new transit route, Azerbaijan answered Armenian and, to some extent, Western allegations that it planned to establish a land corridor in Syunik by using military force.

Moreover, the alternative route through Iran will enable Azerbaijan to restore diplomatic relations and facilitate trade with its big neighbour, while Armenia will remain in play as a future partner for regional transport connections.

Nevertheless, it will remain an arduous task for Azerbaijan and Armenia to reach a final peace, particularly after the military operation carried out by Azerbaijan against the unrecognised Nagorno-Karabakh Republic on September 19. As a result, Azerbaijan ensured full control over Nagorno-Karabakh, which is internationally recognised as part of its territory, and dismissed the separatist government. The dramatic events caused a mass flight of ethnic Armenians from the region.

The Azerbaijani authorities are keen to maintain regional stability by keeping Iran at a close distance and preventing it from allying with Armenia. Undoubtedly, the pragmatic economic partnership with Azerbaijan suits Iran's interests well, mainly due to the economic dividends of transit projects. The stable economic relations with Baku will enable Iran to get direct access to the Russian market within the North-South Corridor (INSTC), as Azerbaijan is the key part of the Iran-Russian (Rasht-Astara) railway connection.

Under the current geopolitical realities, Azerbaijan is willing to become a regional transit and energy hub by investing a lot in various connectivity projects in the Nakhchivan region, which will also weaken Iran's leverage. For example, on September 25, Azerbaijan and Turkey laid the foundation of the Nakhchivan-Ighdir natural gas pipeline, which is expected to be completed in 2024. Once complete, the line will enable Azerbaijan to supply Nakhchivan with its own gas delivered via Turkey, ending the enclave's dependence on Iranian gas imported directly through a separate pipeline from Iran.

With the new transit route between Azerbaijan and Iran, the Zangezur Corridor project will shortly be implemented without Armenia's Syunik province. In this regard, such a scenario matches the interests of the Armenian government, currently grappling with domestic unrest and growing opposition after it failed to provide the de-facto government in Karabakh with military support against Azerbaijan.

Fuad Shahbazov is an independent policy analyst focusing on regional security issues in the South Caucasus and a Chevening FCDO scholar at the University of Durham School of Government and International Affairs (SGIA) . He tweets at @fuadshahbazov.