Tuesday, March 17 2026 11:10

ArmInfo.On February 28, 2026, Israeli Prime Minister Benjamin Netanyahu and US President Donald Trump announced the launch of military operations against Iran, designated "Roaring Lion" and "Epic Fury," respectively. In response, Tehran launched Operation "True Promise-4." This new conflict has  already surpassed the 12-day war of June 2025 in terms of duration and scale.

While the South Caucasus is often overlooked and expert and policy  analysis focuses more on the impact on the Middle East, the  importance of the South Caucasus when examining the war is  nonetheless significant. The region tests the strength of the US and  Iran's power projection, may serve as a potential gateway for  refugees, and is at the heart of several connectivity projects that  could transform global supply chains.

This APRI Armenia Analysis examines the risks and opportunities  arising from the war, both for Armenia and the South Caucasus, and  suggests pathways for addressing them:

The war underscores both the fragility and significance of the window  of opportunity to unlock regional routes and borders.

Providing humanitarian assistance within Iran should be a priority  for Armenia and the other South Caucasus countries to help mitigate  regional instability risks.

An unprecedented opportunity has emerged to engage regionally on  common ground and interests.

WHAT DOES THE WAR MEAN FOR ARMENIA?

Security

Today, Armenia remains the only one of Iran's neighbours that has not  been targeted. The likelihood of security incidents occurring on  Armenian territory, such as the overflight and interception of  Iranian missiles toward Turkiye or drone strikes targeting the  airport in Nakhijevan, remains low.

The only potential area of security concern in the medium and long  term would be Armenia's joint projects with the United States that  Iran might perceive as "dual-use infrastructure," such as the  announced AI data center in Hrazdan (similar facilities to which have  been targeted in Arab countries), or any US presence near Iran's  border as part of the functioning of the Trump Route for  International Peace and Prosperity (TRIPP). If Iran's ambivalent  response in the months following the Washington Summit indicated a  constructive attitude toward certain aspects of TRIPP, especially the  railway route, the war has reinforced the skeptical arm of the  Iranian position.

Longer term, instability from the central governance of Iran may  create logistical, and indeed political, concerns for Yerevan for the  delivery of weapons from Southern markets, such as India, although  other, more complicated, alternatives exist.

Economy

As of now, the economic impact of the war on bilateral economic  cooperation such as trade and the energy deal appears to be minimal  while a more concerning issue pertains to the hurdles for Armenia's  access to Southern markets and vice versa.

Despite the continued growth in trade between Yerevan and Tehran,  Iran accounts for US $768 million, or 3.6% of Armenia's total trade  turnover in 2025, which is not a critical figure. However, Armenia's  dependence on Iran for some goods, such as bitumen, chalk, and  cement, is rather high and alternative sources of import are more  expensive. Long-term disruption to Iranian supply routes could lead  to elevated inflation in Armenia. Beyond the small bilateral trade  ties, more than 20% of Armenia's foreign trade passes through Iran.  According to Armstat (the Statistical Committee of the Republic of  Armenia), Armenia exports cigarettes and livestock to the Middle  East, and imports toys, textile, paper, and furniture mostly from  China. These flows rely on Iranian territory. Exports to the Middle  East via Iran may be rerouted via Georgia and Turkiye without  significant increase of transportation costs, and imports from China  via Iran can be partly rerouted via Georgia and partly replaced by  imports from other countries.  Regardless of the developments in  Iran, the country will need electricity from Armenia, which is  supplied under a "gas for electricity" agreement (Armenia uses gas  supplied by Iran to produce electricity, which in turn is supplied to  both Iran and the domestic market). A deterioration of Iran's  gas-producing infrastructure could disrupt gas supplies, leading to  lower overall bilateral trade turnover. It would also result in a  negative supply shock for the Armenian economy. In the short term, a  full disruption to Iranian gas flows would put upward pressure on gas  and electricity prices. The impact depends, however, on the size of  the disruption to gas flows and the speed with which Armenia can  pivot to alternative energy markets.

A decline in tourism due to the war in Iran could also impact  Armenia's economy. A slowdown in Iranian tourists, who rank third by  volume with an 8% share in 2025, as well as tourists from other  countries who travel to Armenia via Iran, would be a drag on  Armenia's economic growth.

Humanitarian dimension The war could trigger an influx of refugees  from Iran to Armenia, although this depends on the functionality of  Iran's state apparatus and internal stability in the long term. If by  the end of the war Iranian institutions are dysfunctional, this would  trigger a large-scale movement of refugees, which would put  significant pressure on the region's social welfare and healthcare  systems.

Armenia has faced several recent waves of refugees and relocants: in  2020 (from Nagorno-Karabakh following the second war, and from  Lebanon following the Beirut port explosion), in 2022 (from Russia  after the hostilities against Ukraine started) and in 2023 (following  the ethnic cleansing of Nagorno-Karabakh Armenians). Each time, the  limits of the system to host and absorb refugees have been tested and  the government and society have adapted, in most cases, with support  from diplomatic partners. Despite the departure of some Russians,  Armenia's capacity in terms of social infrastructure is likely to be  limited.

The entry to Armenia of relatively low numbers of Iranian Azerbaijani  refugees, even in the range of tens of thousands, could trigger  tensions between them and the local Armenian population, which could  potentially be used by Baku as a pressure point on Armenia. Should  Iran's political system change, it may lead to an influx of mid- and  low- level members of the Islamic Republic's security apparatus, who  would flee from persecution.

The likelihood of a refugee influx to Armenia is currently low, and  will remain so for as long as the Iranian state apparatus remains  relatively stable, but this risk might resurface should hostilities  between Iran, Israel, and the US continue in the medium term. In  other words, preparedness for humanitarian assistance and societal  resilience remains necessary from a policy perspective.

Where do we go from here?

Given the change in the scale and nature of the new war, the Armenian  government should:

Establish an interagency task force: It is likely that hostilities  between Iran and Israel will resume even when the current phase ends.  To help the country prepare for future hostilities, we recommend that  the Armenian government set up a task force to analyze the situation  around Iran, including representatives from the Ministry of Foreign  Affairs, the Ministry of Defense, the National Security Service, the  Foreign Intelligence Service, the Ministry of Finance, and the  Ministry of Economy.

Strengthen security at Syunik's borders with Azerbaijan, the  Nakhijevan Autonomous Republic, and Iran: Given the fragile security  predicament of Armenia's southern region, we recommend that defenses  in Syunik be maintained at high operational readiness, especially for  Air Defence troops, and that further plans are developed to ensure  the region's resilience in crisis situations.

Mitigate risks related to TRIPP, the AI data center, and other  projects that may involve US companies through proactive  communication with Iranian partners, familiarizing them with the  content of these projects so as to avoid possible misunderstandings.  Risks should also be reduced by ensuring that security-related  companies or personnel affiliated in any way with the United States  are not present in the immediate vicinity of the Iranian border,  taking into account the safety of such personnel and the objectives  of the TRIPP project.

Launch a humanitarian initiative in Iran itself: The Armenian  government could launch a humanitarian initiative to provide food,  medical, and other forms of assistance to the population of Iran's  neighboring regions. Delivering aid across the border would help  Iranian society recover more quickly in the aftermath of the crisis,  demonstrate Armenia's positive intentions toward Iranian citizens of  Azeri descent, thereby reducing potential anti-Armenian sentiments,  and mitigate the risk of population flows moving toward Armenia.

Consider expanding the underground gas storage facility and oil  storage facilities in Abovyan to strengthen Armenia's energy security  and resilience: Global and regional energy markets are likely to  remain volatile. While Armenia's energy agreement with Russia remains  in effect until 2043 in principle, a larger volume of oil and gas  reserves would help enhance Armenia's energy security in the face of  severe disruptions and price fluctuations.

WHAT DOES THE WAR MEAN FOR THE REGION :

: when it comes to regional stability?

The August 2025 Washington Summit created an unprecedented momentum  to institutionalize peace between Armenia and Azerbaijan and for  Turkiye and Armenia to normalize relations, but this momentum has not  yet materialized , due to Baku's and Ankara's inaction, thereby  keeping the region in the limbo of a "no peace-no war" situation.

The ongoing war in Iran underscores the necessity for durable  stability and security in the South Caucasus as an important  component of the region's resilience and prosperity. As two wars  continue to rage to its north (Ukraine) and south (Iran), with rather  unpredictable ramifications, sustaining the current "no peace-no war"  situation makes the South Caucasus even more vulnerable to external  shocks and influences. This high degree of uncertainty reduces the  transit and logistical potential of the South Caucasus, affecting  Armenia, Azerbaijan, Georgia, and even Turkiye's connectivity  aspirations.

Armenia has long been ready for the signature and ratification of the  peace agreement with Azerbaijan and the full opening of borders with  Azerbaijan and Turkiye. Prime Minister Pashinyan underscored this yet  again in his recent address at the European Parliament.

Azerbaijan and Turkiye may finally put aside their policy of  procrastination, and accept normalization. During his speech at the  13th Global Baku Forum on March 12, President Aliyev emphasized that  Azerbaijan was committed to peace-"not just long lasting, but peace  forever." The signature and ratification of a peace agreement with  Armenia and the restoration of all communications would be the best  proof of these stated intentions.  Otherwise, Azerbaijan may continue  using preconditions, such as changes to Armenia's constitution, to  postpone the normalization process.

 : when it comes to connectivity?

The TRIPP project could face new challenges. If the Iranian regime  survives in its current form, its leadership will likely have even  harsher anti-American sentiments and could be minded to undermine the  US-led project. This would compromise the potential for TRIPP to act  as a facilitator of cargo transit between Asia and Europe, limiting  its ability to carry large amounts of critical minerals to Western  markets, as envisaged in the Joint Statement on Intent of Economic  Cooperation. The current and any ensuing conflict could make TRIPP  more of a local link between Azerbaijan, Nakhijevan, and Turkiye,  without really realizing the international peace and prosperity  promised in the very name of the project.

Having said that, TRIPP could be seen as more vital than before. Iran  is one of the critical transit hubs for the Belt and Road Initiative,  allowing goods to pass from China to Europe. A more fragile Iranian  supply apparatus could motivate further supply-chain diversification,  making the use of the Middle Corridor, including TRIPP, more  attractive.  From Azerbaijan's perspective, its tensions with Iran  would strengthen TRIPP's urgency, at least as a connection to  Nakhijevan and Turkiye. Baku may be less inclined to use the Aras  Corridor that connects mainland Azerbaijan to Nakhijevan via Iran.

The prospects for the International North-South Transport Corridor  (INSTC) hang in the balance. Whether or not it continues to function  depends on whether the Iranian state remains stable. If the state  does not collapse and Iranian supply infrastructure remains intact,  the corridor may continue to facilitate North-South trade flows,  although the US mayput pressure on Azerbaijan, Kazakhstan, and  Turkmenistan to prevent the use of their territory. However, if the  war ends with the emergence of a dysfunctional Iranian state  apparatus, the implementation of INSTC, including gas pipeline, and  electric grid projects through Azerbaijan will be more challenging.

The Persian Gulf-Black Sea Corridor, which seeks to strengthen Iran's  connectivity with Europe through Armenia, Georgia, and the Black Sea,  will face serious challenges. The US will likely try to undermine the  launch of this corridor as part of its anti-Iranian containment  policy.

Where do we go from here?

The Iran War once more underscored the lack of stability and  predictability in regional and global geopolitics. To be better  prepared for these types of shocks and increase the resilience of the  South Caucasus, its countries should take steps to move the  normalization process and restoration of communications forward. In  particular, Armenia, Azerbaijan, and Georgia should start  consultations about possible joint actions to reduce the negative  impact of supply chain disruption and to implement burden sharing in  case of refugee influx. These developments could lay the groundwork  for the development of a regional identity, something the South  Caucasus has been lacking since the collapse of the Soviet Union.