South Caucasus Navigating Economic and Security Effects of Iran Conflict

(Irakli Laitadze – The Jamestown Foundation) The Iran conflict is transforming the South Caucasus by disrupting trade routes, shifting regional power balances, and increasing the strategic importance of transport corridors linking Europe, Central Asia, and the People’s Republic of China that bypass Iran. Armenia faces growing economic and political pressure because a significant portion of its trade and energy infrastructure depends on Iran. Disruptions threaten domestic stability ahead of upcoming parliamentary elections, increasing Armenia’s vulnerability to renewed Russian influence and leverage. Azerbaijan faces major security and transit risks due to its long border with Iran and reliance on Iranian routes to reach its Nakhchivan exclave. Rising oil prices temporarily boost state revenues, but prolonged instability could damage Azerbaijan’s trade and security. Georgia and Azerbaijan are benefiting from increased transit and aviation traffic as routes bypass Iran and Russia, strengthening pipelines and cargo corridors. Georgia, however, also faces higher energy costs, declining regional tourism, and geopolitical uncertainty. – South Caucasus Navigating Economic and Security Effects of Iran Conflict – Jamestown